ThinCats launches tax-efficient social investment product

By Ryan Weeks on Friday 22 July 2016

Alternative Lending

ThinCats launches new social investment product offering investors up to 30% in tax relief.

Former ThinCats CEO and current Chairman Kevin Caley has launched Community Chest, which he claims is the UK’s first “peer-to-peer for good” proposition (a claim that companies like Abundance will doubtless contest). The new product involves lending to social enterprises through the ThinCats platform, and is a significant departure from the company’s bread-and-butter business lending – which will continue unchanged.

Through the newly launched Community Chest, investors are being offered the chance to invest in unsecured loans to social enterprises. The prime investor benefit is tax relief from the government of up to 30%. Community Chest loans will either carry Social Investment Tax Relief (SITR) at 30% in the first year of a three year loan, or Community Investment Tax Relief (CITR) at 5% per annum on a five year loan.

Investors will only qualify for these tax reliefs if the loans are held for a fixed term, and so they cannot be sold on via the platform’s secondary market. Community Chest loans will be available for investment via online auction, as with ordinary ThinCats loans. Caley sees the Community Chest initiative as an attractive tool for investors seeking to diversify their holdings on the ThinCats platform, while gaining access to tax-free returns. Social and community investment tax reliefs bear no relation to ISA allowances.

The first Community Chest deal is already live on the ThinCats platform – a £500k loan to ART Business Loans. ART is a community development finance institution which provides funding to SMEs in the West Midlands.

Kevin Caley, Founder and Chairman of ThinCats, commented: “The peer-to-peer lending sector was born out of innovation a decade ago, and that disruptive spirit lives on. We stay true to that principle in everything we do. Community Chest is breaking new ground by providing a unique and tax-efficient way of investing in P2P, which I believe will be popular with investors, while delivering a vital new route to funding for social enterprise right across the UK. I hope developments like this encourage further innovation in the cutting-edge fintech sector, and continue to drive momentum toward a new landscape for lending in the UK.”

The newly launched Community Chest initiative seems well placed to help the Crowd Match Fund – which was spun out of Big Society Capital – in the distribution of £5m in funding for SITR-eligible enterprises. The fund put out a request for proposals to alternative finance platforms in December of last year. 

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