Attractive Peer To Peer Returns – Tax Free

You can use some or all your annual ISA allowance to invest in P2P loans through an IFISA (Innovative Finance ISA).

Individual Savings Accounts (ISAs) have been around for more than 15 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 & Shares ISAs in recognition of the increasing popularity of alternative investments.

Increasing Limits – More Scope to Diversify Your Investments

ISA allowances have increased over the years to the current 2016-17 limit of £15,240. You can make new tax free savings up to this limit to any one of the three ISA types, or even split your allowance across types. The allowance for (April) 2017-18 will be £20,000, giving UK savers even more opportunity to diversify their investments and strike a risk-reward balance that they’re comfortable with.

In the continuing low interest rate environment, with investors looking for better rates of return, the introduction of the IFISA could be significant.

IFISA 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 is due to launch its own Innovative Finance ISA in April with the platform granted its full authorisation from the Financial Conduct Authority (FCA) in February 2017 and ISA Manager status in March.

Proplend’s IFISA 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 non-ISA investors currently do.

To make sure you’re kept up to date with the availability and launch of our ISA product, register as a lender (with no obligation to invest) or register for Proplend IFISA updates at the bottom of this page.

Invest Using Current Annual Allowances and ISA Transfers

Although IFISAs are a relatively new option, that doesn’t mean that you can only invest in them with your current and future ISA allowances. You can use some or all this year’s unused allowance to invest in one but you can also invest with ISA pots from previous tax years.

The funds you’re looking to transfer to your IFISA must still be invested in a past ISA and would need to remain there until requested by the new provider. Do not withdraw any funds and send them to the provider yourself – this will be treated as using some or all your current allowance rather than a transfer of existing ISA monies.

Keep Your Past ISA Funds Working Hard For You

You can transfer 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 elsewhere, 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 a transfer form and the providers should do the rest. If the ISA funds are not held as cash by the provider, they will need to convert it to cash by selling your existing investments before transferring.

Unfortunately, you won’t be able to transfer any existing 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.

Personal Savings Allowances

Current savings allowances (also introduced from April 2016) enable basic rate taxpayers to earn investment income of up to £1,000 before paying tax (up to £500 tax free for higher rate taxpayers). The thresholds for these allowances are subject to change, so these concessions could be reduced or even withdrawn. Make sure you take advantage of these allowances while they’re being offered.

ISA Manager Status and Launch

We received confirmation of Proplend’s ISA Manager approval from HMRC on 22 March 2017 – giving us the green light to launch our Innovative Finance ISA. We’re working hard to make our P2P loan investments available within a tax-free ISA wrapper by the end of April – Proplend’s IFISA is coming soon!


Progress Towards Proplend IFISA Launch

  1. Full FCA authorisation (‘approval’) granted by the Financial Conduct Authority (FCA)
  2. Confirmation of ISA Manager status from HM Revenue and Customs (HMRC)
  3. Potential investors invited to register their interest and sign-up for updates
  4. IFISA open for investments by the end of April 2017