Innovative Finance ISA | IFISA
Attractive Peer to Peer Returns on Secured Loans – Tax Free
You can use some or all your annual ISA subscription allowance to invest in P2P lending through an Innovative ISA (IFISA).
Individual Savings Accounts (ISAs) have been around for more than approaching 20 years now, offering UK savers the opportunity to earn interest and benefit from capital gains – tax free. From April 2016, IFISA was introduced alongside the traditional Cash and Stocks and Shares ISAs in recognition of the increasing popularity of alternative investments and persistently low UK savings rates.
More and more investors are willing to accept some capital risk as they go in search of better rates of return.
Increasing Limits – More Scope to Diversify Your Investments
ISA allowances have increased over the years to the current 2017-18 limit of £20,000. Individuals can make new savings (‘subscriptions’) each year up to this limit, across all the ISA types. The new ISA allowance gives UK savers even more opportunity to diversify their investments and strike a risk-reward balance that they’re comfortable with.
Whilst the high rates of fixed income returns available from P2P lending are particularly attractive, Proplend understands that the steps it takes to minimise lender risk can make all the difference to ‘Lenders’. Our property-secured ISA investments are each secured with a first legal charge over an income producing UK commercial property.
Innovative Finance ISA Availability
Although it’s still early days for the Innovative Finance ISA, new providers are entering the market all the time. In 2017 the IFISA has started to truly come to market as the list of providers being granted FCA approval and ISA Manager status has started to grow.
Proplend was granted full authorisation from the Financial Conduct Authority (FCA) in February 2017 and ISA Manager status in March. Our IFISA launched to existing platform lenders as at 30 May, with wider availability later in the year.
Proplend’s Innovative Finance ISA will enable investors to earn attractive, risk-adjusted returns completely tax free – either by investing the current year’s ISA allowance or through transferring in ‘ring-fenced’ ISA funds from previous tax years. IFISA investors will hand-pick their Proplend loan and tranche investments in the same way that our non-ISA investors currently do.
To make sure you’re kept up to date with the availability and wider launch of our ISA product, you can register as a Proplend Lender or sign up for Proplend IFISA updates at the top or bottom of this page. In the meantime you can read our comprehensive Innovative Finance ISA guide to find out how it will all work.
Invest Using Current Annual Allowances and ISA Transfers
You can invest in IFISA by transferring your ISA pot(s) from previous tax years – it’s not all about having cash and ISA allowance spare to subscribe this tax year.
The funds you’re looking to transfer to your IFISA must still be invested in an ISA and would need to remain there until requested by the new provider. ‘Transferred’ ISA funds must move directly from provider to provider. Do not withdraw any funds and send them to the provider yourself – this will be treated as a new subscription rather than a transfer of existing ISA monies.
Keep Your Past ISA Funds Working Hard For You
You can request the transfer of ISA monies from one provider to another at any time and it’s probably simpler than you think. You might find that returns for your existing ISA(s) aren’t what they used to be – reports estimate foregone earnings to date to be in the region of £100bn. Better returns can often be available by ‘shopping around’, so it could be well worth your while doing some research into what ISA rates are currently being offered.
Just contact the receiving provider, complete their transfer in form and the providers will do the rest. If the ISA funds are not already held as cash by the transferring provider, existing investments will need to be sold to free-up sufficient funds for the transfer payment to the new provider.
Unfortunately, you can’t transfer non-ISA peer to peer loan holdings into an IFISA. However, as things stand, personal savings allowances available in the UK mean savers aren’t taxed on their income until they reach certain thresholds so there’s a good chance you’re receiving these P2P returns tax free anyway.
Progress Towards Proplend IFISA Launch
- Full FCA authorisation (‘approval’) granted by the Financial Conduct Authority (FCA)
- Confirmation of ISA Manager status from HM Revenue and Customs (HMRC)
- Proplend’s IFISA Terms & Conditions and IFISA Guide published
- Proplend’s IFISA launched to existing platform lenders as at 30 May 2017. Wider availability will be confirmed in the coming weeks. Register your interest and sign up for updates below.