Using CPI rather than RPI could save firms £1.5bn  

Creating a simple, fair and competitive system must be the chief aim of the Government's business rate review according to the CBI, the UK's leading business group.

The CBI says business rates are limiting investment and hampering competitiveness, as in Germany property taxes are one fifth and in France one third of the level paid by businesses in the UK.

Future changes must be geared towards boosting growth, investment and jobs, the CBI says in its fully-costed reform submission to the Government's business rates review consultation, which closes today (12 June).

Among the CBI's recommendations are measures to remove the smallest properties from business rates, implement more frequent revaluations and use the Consumer Price Index as opposed to the Retail Price Index.

Katja Hall, CBI Deputy Director-General, said:

"The current business rates system harms businesses by relying on a decades-old model that no longer reflects economic conditions. That's made life tough for retailers in particular.

"These reforms are long overdue so it's good that the Government is following through on its commitment to look closely at how it can help alleviate the most onerous aspects of business rates.

"We want a simpler, fairer and more competitive system by having more frequent valuations, removing the smallest properties from paying rates, and using the Consumer Price Index so rates don't outpace inflation.

"However we must avoid devolving rate-setting powers as this will create an uneven playing field, distort growth across the UK and add extra costs for companies. Any further moves towards business rates retention must be backed up by clear evidence that it contributes to growth. As far as businesses are concerned the case is yet to be proven."

French startup Yomoni aims to make wealth management available to everyone online 

Yomoni successfully completed its first fundraising round of 3.5 million euro in June. The Fintech startup will soon launch a groundbreaking online wealth management service that offers retail investors attractive new options to diversify and grow their long-term savings.

Yomoni is set to become France's first fully online wealth management company. The company will offer small retail investors simple yet effective wealth management services through its web platform, www.yomoni.fr. Its pioneering approach is designed to let investors earn higher returns than conventional savings or retirement accounts, with fees of only 1.6% and a minimum deposit of €1,000. It is currently awaiting final approval from the AMF, the French securities market regulator.

In today's low interest-rate environment, regulated savings accounts and the French retirement-savings system provide unattractive returns and few options for portfolio diversification. Private banking services offer more choices and better performance, but are reserved for high-net worth individuals. Higher-return investment vehicles, meanwhile, are a turnoff for retail investors due to their complex structures and high or opaque fees.

In contrast, Yomoni's revolutionary service will offer simplified asset management services to all types of retail investor, with competitive-and fully transparent-fees.

Yomoni will deliver three key benefits:

• Easy-to-use online investment accounts, which can be opened with as little as €1,000 and allow funds to be withdrawn at any time (daily liquidity);
• Competitive, all-inclusive fees of 1.6% per year, including: Yomoni management fee (0.7%), life insurance fee (0.6%) and underlying portfolio costs (exchange-traded fund fees of 0.3%), with no other commissions or hidden fees;
• Investment portfolios tailored to different time horizons and levels of risk tolerance, using clear, tested investment strategies that target attractive returns at a low cost.

The company will offer ten portfolio types, each with a different risk/return profile and specific allocation to exchange-traded funds (ETFs).

This initial fundraising round brought two top-tier investors into the company: Crédit Mutuel Arkéa and IENA Venture, a business incubator run by Financière de l'Echiquier, which has a track record of backing innovative firms, including Phileas Asset Management, Gemway Assets, EthiFinance, Erasmus Gestion, and Obafrica AM. Yomoni will use the 3.5 million euro of fresh funds to rapidly launch its online asset management service.

Social Investment Tax Relief developments so far . . .

Since the Social Investment Tax Relief (SITR) was first announced in last year's Budget, it has offered a new dynamic to social impact investing.  As SITR deals have started to take place, it is encouraging to see how diverse the types of investments are, how wealth advisers are identifying socially motivated investors and how individuals' investment capital is flowing into social impact investing.

There have been four SITR deals to date:

FareShare South West is a Bristol based charity which works with the food industry to reduce the amount of fit-for-purpose food going to waste, distributing it to local organisations working with vulnerable people so that the most in need have nutritious meals.  They took an investment of £70,000 from a small group of angel investors to scale up their activities in the Bristol area, particularly the expansion of their catering arm, which provides socially conscious and sustainable catering for events, festivals and offices. They also offer work experience and job opportunities for vulnerable individuals who are excluded from the job market.

FC United of Manchester is a supporter-owned football club which is democratically run by its 4,000 members and raised a £270,000 loan stock scheme using SITR. Without their own ground since they were established in 2005, they used the loan stock as part of the funding for a new 5,000 capacity stadium, opening at the end of May 2015. The project includes new sport and non-sport community facilities, giving them a base in Moston, North Manchester, from which to continue their outreach work.

Two Social Impact Bonds (SIBs), Ambition East Midlands and Aspire Gloucestershire, were arranged by Triodos Bank to provide £910,000 to four charities to help 500 young people who are homeless or at risk of homelessness. These social impact bonds are payment by results contracts with the Department for Communities and Local Government and supported by Cabinet Office. Each SIB will use the investment raised to deliver programmes aimed at housing and supporting vulnerable young people into education, employment or training. Investors receive a competitive rate of interest and the benefit of the tax relief. Return of capital is dependent on the successful achievement of the stated goals of the SIB.

Future Developments

Looking forward, we know there are a number of SITR funds in the making, with Social Investment Scotland having recently launched SIS Community Capital and it is likely that we will see another regional fund very soon. Resonance, the impact investment firm  that executed this first SITR investment has since gone on to launch the first SITR fund in partnership with UBS Wealth Management in Bristol, with a view to creating new SITR funds in cities across the UK.

The Aspire Gloucester SIB particularly attracted the attention of Paradigm Norton, a leading UK financial planning firm that advised four of its clients into social impact investment using SITR. Financial advisers and wealth managers looking for resources to help them make social impact investment recommendations can look to Worthstone, a leading specialist impact investment service for wealth advisers.

Finally, the Government is looking to enlarge SITR at present by increasing the investment limit into social enterprises to £5m per annum, up to a maximum of £15m per organisation, and extending the relief to small-scale community farms and horticultural activities. Once this is approved it is likely that we will see more SITR fund opportunities giving social impact investors more choice to invest in companies that deliver positive impact in areas that have meaning to them. 

By Evita Zanuso, Financial Relationships Director, Big Society Capital

If you have any questions or comments regarding SITR funds and investments, please contact Evita Zanuso [email protected] or Simon Rowell [email protected].