Despite investing in the same portfolio of British business, the products have some fundamental differences to be aware of.
- With the Classic account, you are matched directly with borrowers and can access your funds within 30 days (in normal market conditions). The interest rate you earn is dependent on whether you reinvest earnings, what the current Market Rate is and how consistently your funds are deployed (the ‘Deployment Rate’).
- With the ISA account, your funds are invested in an unlisted bond for a period of 12 months and will be held in an IFISA tax wrapper. The proceeds of the bonds will then be lent to the same portfolio of borrowers as with the Classic account. The interest rate is fixed and not dependent on the Deployment Rate, Market Rate or reinvestment. Investments can be held free of UK income tax and free of Capital Gains Tax (CGT) liability (tax liability will depend on your individual circumstances).
Your capital is at risk when you lend to businesses. Find out more here.