Introducing the Innovative Finance ISA (IFISA)
Individual Savings Accounts or ‘ISAs’ are tax free savings wrappers introduced by the UK Government in 1999. Individuals have annual (‘Subscription’) allowances for each tax year (6 April to 5 April) that limit the amount they can ‘invest’ to their ISA(s) without paying tax on the income or capital gains. The ISA allowance for the current tax year (2017-18) is £20,000.
The Innovative Finance ISA or ‘IFISA’ was added to the list of available ISA types from 6 April 2016, giving UK ‘savers’ both an alternative asset class and a means of diversifying investment. The inclusion of peer to peer (P2P) lending investments offered a higher income alternative to Cash ISAs at a time of persistently low interest, without the fluctuating capital values of Stocks and Shares.
Peer to peer lending describes a direct financial arrangement from individual to individual or individual to business, facilitated by online Financial Technology (FinTech) ‘platforms’. Bypassing the traditional banking system, investors (‘Lenders’) can achieve higher rates of return when accepting the risk that the borrower may not be able to keep up repayments or repay all their loan.
These alternative investments aren’t covered by the government-backed Financial Services Compensation Scheme (FSCS), so P2P provider platforms typically establish other safeguards to help minimise lending risk. For example, all Proplend loans must satisfy comprehensive due diligence checks and be secured with a first charge over income producing UK commercial property.
Permitted IFISA Investments & Providers
As things stand, only peer to peer lending (P2P) investments and ‘crowdfunding debentures’ are permitted within IFISA – we’ll focus on the former.
UK P2P lending is regulated by the Financial Conduct Authority (FCA), with all providers either fully authorised or operating on an ‘interim permission’ basis. All platforms with interim authorisation must be working towards stricter full authorisation requirements and can’t offer an IFISA until they have the FCA’s ‘full approval’.
Peer to peer providers with this approval are then only able to accept ISA ‘Subscriptions’ (new money paid into an ISA) and ‘transfers’ (funds already invested within another ISA in your name) once they have also been granted ISA Manager status by HMRC. So IFISA providers like Proplend are approved by the FCA and HMRC.
Proplend’s P2P platform connects investors directly to creditworthy borrowers – enabling investors to earn higher fixed income returns and borrowers to gain access to funding which may not otherwise be available. Proplend’s new IFISA will offer the same self-selection of loans, the same attractive interest rates and the same great security – tax-free.
Note: Our ISA is now freely available to all registered platform lenders as of 1 August 2017.
Funding IFISAs with 'Subscriptions'
You can invest to an IFISA using your current ISA allowance and by transferring existing ISA ‘pots’.
You can invest (‘subscribe’) new money into Individual Savings Accounts each year but there are limits – annual ISA allowances. The ISA allowance for the tax year 2017-18 has increased to £20,000. So, there’s more scope to invest tax free and with the addition of IFISA, more scope to diversify investments.
New ISA subscriptions can be spread across new and existing ISAs with different providers AND across the various ISA types. Your ISA allowance doesn’t have to all go to a new Cash ISA, or all to an IFISA for that matter. It could be invested partly to an existing Cash ISA, partly to a new Stocks and Shares ISA and partly to a IFISA for example.
You can only invest new subscriptions to one of each of the ISA types each tax year. Not one of each type with each provider, just one of each type with any provider. It is your responsibility to ensure that you’re not subscribing to too many ISAs or exceeding your allowances in any given tax year. Each ISA provider can only tell you what you’ve subscribed to them and only flag if you have used up your annual allowance in an ISA with them alone.
The graphic above shows a £20,000 (2017-18) subscription allowance being split between three different types of ISA. It also shows a fourth new ISA and a second, current year IFISA, set up to reinvest and consolidate transfers from Cash and Stocks and Shares ISAs from previous years.
Note: Opening a second new ISA of one type is perfectly within the rules in this example as new subscriptions are only invested to one of the IFISAs. Also, subscriptions don’t have to go to new ISAs (opened in that tax year) – they can go to an existing ISAs of that type. If you’re looking for an ISA where you can remove funds and put them back before the end of the tax year, it’s worth checking whether your old ISAs in particular are Flexible ISAs.
It’s important to be aware that once an ISA has been opened, it stays open and invested with that provider until you withdraw all funds or transfer all funds to another ISA. Those savings remain within that tax free wrapper until you decide to do something with them. Current year subscriptions can also be added to an ISA started in a previous tax year.
You don’t have to remove the funds from an ISA at the end of each tax year but you should keep an eye on how they are invested and what rate of return you’re getting – particularly beyond that first year. For example, many people will have opened Cash ISAs when interest rates were much higher and whilst that money is still invested, that ISA won’t be earning the same rate of interest when rates are low like they are now.
Thankfully P2P lending offers a fixed rate of return for the entire loan term, so IFISA interest rates will remain at the level that attracted you to invest until they repay. You can then just reinvest the capital in a new loan or withdraw funds (either flexibly or permanently depending on your circumstances and what the rules of that IFISA allow).
Funding IFISAs with 'Transfers'
Freedom to move your existing ISA monies to new providers and ISA types
ISA ‘transfers’ refer to the movement of your ISA savings direct from one tax free ISA wrapper to another. Do not withdraw ISA money yourself with the intention of depositing it into a new or existing ISA. Providers arrange this direct once you’ve completed and signed the receiving provider’s transfer form.
Transfers enable you to freely move your ISA investments around – to diversify your holdings and consolidate them. While the 2017-18 allowances give us all significant scope to invest new money into ISAs, your right to transfer existing ISA funds mean it’s possible to invest larger amounts to the providers and asset classes that you want to – when you want to. You don’t have to build up your holding in new ISA types over a number of years or wait to take advantage of attractive rates.
You can transfer all or part of your existing ISAs to a new ISA, or consolidate them to another existing ISA. For a Cash ISA it might be that an introductory bonus rate has expired, or a tracker rate is now lower than you target return. It may be that you’re unhappy with service levels or you just think some or all that money could be working harder for you in a Stocks and Shares or IFISA, or both.
Some key points to remember about transfers
- All transfers from one ISA to another are made direct from provider to provider – in cash
- Do not transfer or withdraw funds from your ISA yourself that you’re intending to transfer
- You cannot transfer the investments held in one ISA ‘in specie’ to another ISA. You can sell them and invest the cash.
- If a transfer is coming from a Stocks and Shares ISA or IFISA, you’ll need to sell the investment holdings in that ISA to make funds available for the provider to transfer
- Depending on whether it’s a full or partial transfer, you may need to decide which investments to sell to fund the transfer
- You can request a ‘full’ transfer (of the entire value of an ISA) or a ‘partial’ transfer (of some of the value) of any ISA
- Some providers may only allow you to make full transfers out of their ISAs and some providers may charge fees for transferring
- If you’re requesting a transfer that includes current year subscriptions then all current year subscriptions in that ISA must be transferred. Your pot of new subscriptions in that asset class must stay together.
- Transferring all of your current year subscriptions to a new ISA of the same type doesn’t break the one ISA per type per year for new subscriptions rule – the receiving scheme is effectively the replacement one for the year
- You can request the transfer of funds from one ISA type to another as well as between the same types. Remember – you can’t instruct the transfer of assets, just cash.
Proplend IFISA - Available to all new and existing registered platform lenders
About Proplend IFISA
Following FCA approval, Proplend launched its Innovative Finance ISA (IFISA) on 30 May 2017 – initially to existing customers only. Two months later availability was extended to include new customers.
The platform’s P2P loan investments and attractive fixed income returns are available tax free when purchased through the Proplend IFISA. ISA ‘Lenders’ get access to the same choice of three risk-reward ‘Tranches’, the same choice of loans secured by income producing UK commercial property and the same £1,000 minimum investment opportunities as non-ISA investors.
Monthly Fixed Income
Loan interest is paid to your Proplend IFISA account on the designated monthly payment date for each loan. That means you can have a predictable stream of fixed income coming in throughout the month.
Your loan interest will continue to accumulate in your IFISA account for reinvestment unless you request regular interest drawdown to your personal bank account. If you indicate that you’d prefer drawdown, we’ll automatically action this. You can change this preference at any time within the ‘Banking’ section of your Proplend dashboard.
All IFISA loan investment income is paid direct to your Proplend account. Income is paid ‘gross’, without any tax deducted and there will be no need to include your ISA income on your annual tax return. We will however provide you with an annual ISA statement for your records, with a full transaction history available when logging into your Proplend account. We are not authorised to offer Lenders tax or investment advice.
Opening a Proplend IFISA is 100% Online, Convenient and Hassle-Free
Proplend’s IFISA initially launched to existing platform members only but is now freely available to all new registered platform lenders.
Existing (verified) platform Lenders – will see a new ‘Open ISA Account’ button has appeared when logging into their Lender Dashboard. Just click the button and fill in the blanks (most of the information on the ISA application is pre-populated). The application requires you to accept our IFISA Terms and Conditions – once submitted, you’re ready to fund your ISA.
New platform users – will need to spend a few minutes registering as a Proplend Lender in the first place and then provide us with some details for our automatic identity verification checks. Once verified by us, simply click on the ‘Open ISA Account’ button as above. There’s no need to invest outside of the ISA if you’re only looking for an IFISA to begin with – but the option’s always there.
If you’re starting your Proplend IFISA with subscriptions, there’s really no reason why you can’t be up and running within 24 hours depending on how quickly you can get the funds across to us. However, please don’t send subscriptions payments until you have received confirmation from us that your ISA account is open – you won’t know the ISA lender reference you’ll need to include as the payment reference.
Funding Your Proplend IFISA Account - Subscriptions and Transfers In
Proplend IFISA loan investments can be funded using your current tax year annual allowance (‘subscriptions’) and with ISA transfers from existing Cash ISAs, Stocks and Shares ISAs and other IFISAs.
We’ll let you know as soon as we’ve received your funds and they’ve been allocated to your IFISA account. This will either be on receipt of a payment direct from you (for new ISA money) or when we’ve received a transfer payment (from one or more of your existing ISA Managers).
To subscribe new money to Proplend IFISA
- Log into your Proplend (ISA) Lender Dashboard and select the ‘Banking’ option. There you’ll find our bank account details to send the money to and a reminder to include your ISA-specific ‘Lender ID’ as the payment reference (in the format ‘LENDxxxx-ISAxxx’)
- Enter the amount you’re subscribing in the pre-populated message (so we know to look out for it) and click ‘Submit’
- Initiate the payment from your bank (don’t forget to include that ISA Lender ID payment reference). We’ll allocate the cash to your ISA account and let you know when the funds are available to invest.
For existing Proplend lenders the banking process for paying funds to us will be exactly the same process as you’re used to. Just remember the payment reference will need to be different for ISA payments so we can differentiate them from your ‘Classic’ account payments.
For ISA transfers TO Proplend
Just complete our transfer in form and we’ll do the rest. We have different forms for Cash (and IFISA) and Stocks and Shares ISA. These forms tell us what we need to know for each type and give us permission to communicate directly with the transferring ISA Manager. We’ll send the completed form off to that provider and make sure your wishes are fulfilled as soon as possible.
You can either complete our transfer form on your computer and print it off, or print it off first and then complete the form by hand. Whichever way you complete the form we will need a ‘wet’ signature from you on the form. When the form is completed and signed, send it to us to request the transfer on your behalf.
We CAN’T accept ‘in specie’ transfers or subscriptions
Unfortunately, HMRC ISA rules prevent us from accepting Proplend loans (or any other existing investments held outside of an ISA) into a Proplend IFISA. All subscriptions and transfers must be as cash. However with current UK personal savings allowances, you won’t pay tax on the first £500 or £1,000 of investment income (depending on your tax band).
Minimum investment required for Proplend loans
Loans listed on our platform are typically split into £1,000 investment parts. Investments must therefore be in multiples of £1,000, so you could buy six parts of a single loan with a £6,000 investment or invest it across two to six loans.
You’ll need to remember that if you’re investing through (our secondary market) the Proplend Loan Exchange, each loan part will cost a little more than the £1,000 capital amount as you’ll also be paying the accrued interest for the month to date at the point you buy the loan part(s). Paying the accrued interest at the time of investing means you get all the monthly interest for the first partial month you’re invested.
If investing in a loan from outset (‘In Funding’) you will not need to pay any accrued interest at the date of investing – only the loan capital.
Choosing Which Loans and Tranches to Invest In
You’re free to invest all your Proplend IFISA to one preferred loan or diversify your loan investments across multiple platform loans listed as either ‘In Funding’ or ‘Proplend Loan Exchange’.
Upon registering as a Lender, you will immediately gain access to additional information about our loans and borrowers to start considering which loan (or loans) you’re interested in. Once verified, we’ll give you access to all our due diligence information so you’re ready to invest when your account is funded. You’ll be able to review the valuations, leases and borrower disclosures that we used to make our decision whether to accept the loan request.
You’ll have your own preferences in terms of loan profile – the securing property location, the borrowing company’s industry and any additional security being offered. However the biggest single factor impacting your choice of loan investment(s) is likely to be your risk-reward preference. We’ve tried to make this choice as straightforward as possible for you by grouping investments by their loan to value (LTV) percentage but we’re not authorised to offer investment advice.
Proplend Loan Investment Tranches
To help you identify investments that meet your risk-reward profile, Proplend pioneered the peer to peer lending Loan Tranche Model. We understand that investors have different risk and return appetites, so our platform loans are split into up to three loan to value (LTV) based ranges – enabling more people to feel comfortable investing.
For example, Proplend Tranche A loans are one of the lowest-risk loan investments on the UK P2P market. Loan capital is capped at 50% of the securing property value for these investments with an average annual interest rate (AIR) of 6.91%* pa. At the other end of our scale, Tranche C (our higher risk) investments, are capped at 75% LTV with an average AIR of 11.05%*. *AIRs calculated for 12-month period to 30 June 2017
These same loan tranches are available to invest in via our IFISA – simply choose the tranche (or tranches) with a risk-reward balance you’re comfortable with, across the loan investments that you want to invest in. You can choose to invest across multiple loans and one or more LTV-based tranches to diversify your Proplend IFISA. We’re not authorised to offer investment advice.
You Don’t Have to Invest Your Whole ISA Allowance in One Go
New loans will come onto the platform throughout the tax year, so you could invest some of your ISA allowance now and some later, or transfer in some of your ISA monies from previous years now and more later.
Perhaps you don’t want to invest too much in one loan or can’t immediately see an investment you’re completely happy with – once your Proplend IFISA is open, you can ‘top it up’ with your unused allowance and other ISA pots at any time.
You’ll also be able to invest ISA subscriptions for future tax years into an IFISA that was opened with us in an earlier tax year – there’s no need to open a new Proplend IFISA for each tax year you want to subscribe.
Proplend's IFISA Is Flexible
With a flexible ISA you can take money out of your Proplend IFISA and put it back in before the end of the same tax year without it counting as a new ISA subscription. Funds from previous tax years can be withdrawn and deposited in this way along with current year subscriptions. To use this flexibility, you will probably need to sell some of your loan investments unless you have the required amount available in cash within your IFISA.
Below are a few example scenarios illustrating how flexible ISA withdrawals and deposits can work:
- You could withdraw £10,000 subscriptions on 9 July 2017 and add replacement subscriptions of up to £10,000 by 5 April 2018
- You could withdraw £10,000 subscriptions on 9 July 2017, add replacement subscriptions of £4,000 on 1 November and up to £6,000 as replacement subscriptions by 5 April 2018
- Balance permitting, you could withdraw £40,000 from your IFISA (previous year funds only) and return up to £40,000 to your ISA before 5 April 2018 without it being considered as new subscriptions.
- Balance permitting, you could withdraw current and previous year funds totalling £40,000 from your IFISA and return £25,678 before 5 April 2018. It is assumed that previous year ISA monies are returned (in full) first and the balance treated as replacement subscriptions.
However the following scenarios wouldn’t be treated purely as flexible withdrawals and deposits …
- If you’d withdrawn £10,000 subscriptions from your ISA on 9 July 2017 and make a deposit of £10,000 after 5 April 2018, this would count as a £10,000 new subscription for the 2018-19 tax year
- If you’d withdrawn £10,000 subscriptions from your ISA on 9 July 2017 and make a deposit of £11,000 before 5 April 2018, £1,000 will be treated as an entirely new subscription – £10,000 as a replacement subscription.
- You can’t withdraw previous years’ ISA monies only if you have current year subscriptions in your IFISA. HMRC rules require us to assume that all current year subscriptions must be withdrawn from the flexible ISAs before any withdrawals can be treated as past year monies.
As you can see, you can remove one amount from your Proplend IFISA and deposit a different amount. Any amount deposited over the amount withdrawn would count as new ISA subscriptions. If you don’t return the full amount withdrawn to the same flexible ISA within the same tax year – it will be treated as a permanent withdrawal from that ISA.
For more examples of how ISA flexibility works, read the ‘Flexible ISA Customer’ guide produced by TISA (Tax Incentivised Savings Association).
If you withdraw current year subscriptions from your IFISA, the ‘net’ amount at the end of the current tax year (subscriptions paid in minus any subscriptions withdrawn) will be treated as the amount you subscribed. Net subscriptions is not just the total of all subscriptions in. The running total of subscriptions into our IFISA can never exceed the annual ISA allowance – even if you intend to make a withdrawal which would bring net subscriptions back to the amount allowable by the end of the tax year.
Example scenario – If you withdraw all subscriptions you’ve made to an IFISA in the year they were subscribed but don’t replace them in that same tax year, your net subscriptions reported to this ISA will be nil. It will still be considered that you have ‘subscribed’ to your one IFISA for the year though, so you won’t be able to subscribe to another IFISA this tax year. You may still have scope to subscribe to one of the other ISA types you are yet to subscribe to in that tax year.
We will keep you updated with the running total of net subscriptions you’ve made to your Proplend IFISA (including any current year subscriptions that have been transferred to us by other providers). We will never let you subscibe more than the full ISA allowance in any given tax year to our IFISA alone but only you will know where else you have subscribed.
It’s your responsibility to keep track of what you have subscribed to all your ISAs in any one tax year and how many ISAs of each type you’ve subscribed to in that tax year. If you exceed your annual subscription allowance or exceed the number of ISAs of one type you could subscribe to in one year this will need to be remedied. Your ISA provider(s) may charge you a fee for the extra admin required to repair or even ‘void’ your ISA.
Flexible withdrawals from an ISA should not be confused with ISA ‘transfers’. For one thing, transferring all current year subscriptions within an ISA preserves your right to invest subscriptions in another ISA of the same type. ‘Withdrawing’ subscriptions and reinvesting them yourself with another ISA of the same type would not be permitted.
Caution – Never withdraw funds from your ISA that you intend to ‘transfer’ to another provider and never try to rectify breaches of ISA limits yourself. Your ISA providers will take the appropriate action on your behalf based on HMRC guidance.
You Can Withdraw Money from Your IFISA Whenever You Want
So a Proplend IFISA is flexible and you can withdraw and replace ISA monies within the same tax year. But you can also draw-down some or all the value of your ISA permanently.
Subject to selling your loan investments and the required cash being available, you can request a withdrawal from your ISA through your Lender Dashboard. You don’t have to tell us at the time whether you intend to return some or all the funds before the end of the tax year (i.e. whether it’s a flexible withdrawal or not). Any withdrawals not returned to your ISA before the tax year end will simply be treated as permanent withdrawals. Any amounts replaced before 6 April will be treated as flexible withdrawals. If you’re uncertain how much you can replace without making new subscriptions, just give us a call.
Remember: Your Proplend IFISA will remain open unless you specifically tell us that you want to close it. Keeping it open means you can invest new ISA subscriptions and transfers in the future.
Transfers Out of Proplend IFISA
Just as you’re free to transfer any ISA pots from previous years into a Proplend ISA, we think you should also be completely free to transfer out some or all your ISA monies with us – without paying transfer out fees. By not charging transfer out fees we hope you’ll have more confidence investing to a Proplend IFISA in the first place.
You’ll need to sell some or all your loan investments before you can transfer out as we can only transfer cash to other providers. You can make your loan investments available for sale through our secondary market – the Proplend Loan Exchange (PLE).
When you’ve sold the loan(s), we’ll transfer the proceeds as a single payment to the receiving provider. Your Proplend IFISA will remain open and able to accept new ISA subscriptions and transfers in unless you specifically tell us to close it permanently.
Unlike many ISA providers, we don’t charge for account opening and we don’t charge for transfers in – or for transfers out. There’s no charge for withdrawals of £50 or more but we will pass on bank charges (£0.55) for payments out of your IFISA under £50. We do reserve the right to charge for extra admin caused by Investor breaches of ISA rules (‘Voids’).
Summary of IFISA charges
- ISA Opening No charge
- ISA-Specific Fee No charge
- Transfer Ins No charge
- Transfer Outs No charge
- Withdrawals £50+ No charge
- Withdrawals under £50 £0.55 bank charge for each
- Voids incl. ‘repairs’ Up to £75 depending on the extra admin required
How we make our money
Proplend aligns itself with the interests of its Lenders by deducting a ‘Lender Fee’ equivalent to 10% of the monthly interest from all monthly gross interest payments – we get paid when you do. This is the same for both traditional Proplend investments and Proplend IFISA loan investments.
We also charge a 0.5% ‘Novation Fee’ for loan investments sold through the Proplend Loan Exchange (PLE). You will only incur this fee if you sell a loan investment before the end of the loan term.
Your Right To Cancel
You will have 14 days from opening your Proplend IFISA to change your mind and cancel. Just let us know within the cancellation period and we’ll return any new ISA subscription monies to you. Your right to cancel will expire after 14 days or once you have invested to any of our platform loans – whichever is soonest.
You will also effectively waive any remaining cancellation period should we receive a transfer in from another of your ISA providers during the first 14 days. If you change your mind after your cancellation period has expired, we would follow the withdrawal and/or transfer out process(es). This would still count as the one IFISA you are allowed to subscribe to for the year unless you have never subscried or you transfer out all current year subscriptions to another IFISA provider in the same tax year you opened the Proplend IFISA – then that becomes your one for the year.
Remember – For more information about the Proplend Innovative Finance ISA please take a look at our IFISA Terms and Conditions.
Summary - Why Choose Proplend IFISA
- Attractive rates of fixed interest income earned tax-free
- Hassle-free online proposition – you’ll be able to register as a ‘Lender’ and start investing within hours
- A choice of loan to value-based investment ‘Tranches’ – one to suit most risk-reward appetites
- Buy and sell loan investments on the Proplend Loan Exchange (PLE) – our secondary market
- Flexibility to withdraw money and return some or all that amount to the ISA in the same tax year without it being considered a new subscription
- No ISA opening or closing fees and no transfer charges or limits
- Proplend has full Financial Conduct Authority (FCA) authorisation and HMRC ISA Manager status
- The personal touch – great customer service
- Proplend has been described as “one of the lowest risk P2P lending platforms” – placing an emphasis on minimising Lender risk
- All Proplend loans are secured with a first legal charge of income producing UK commercial property but Capital is at risk
- Maximum loan to value (LTV) of securing commercial property is 75%
- A six-month ‘interest reserve’ is withheld from the loan capital drawn down as a Lender safeguard
- Comprehensive due diligence info is made available to registered Lenders about all borrowers, properties and leases
IFISA Frequently Asked Questions
1. How do I open an IFISA with Proplend and ‘Subscribe’?
Proplend’s IFISA is now freely available to all customers having initially been launched to existing customers only. Visit www.Proplend.com and click on the ‘Register as Lender‘ or ‘Register Now‘ buttons on our homepage
Opening your Proplend ISA – 5-10 minutes
- Take a few minutes to register as a platform Lender.
- Click on the validation link in the registration confirmation email you’ll receive immediately after
- Validation will be confirmed and you’ll be taken to a login screen for your ‘Lender Dashboard’
- Once logged in you’ll be asked to provide some details for our automatic identity checks.
- When we’ve verified you, you’ll see a prominent ‘Open ISA Account’ button (towards the top right-hand corner of your Dashboard)
- Complete the ISA registration form and declaration – much of the information required will be prepopulated from your initial registration. Fill in any blanks and give us your National Insurance Number.
Subscribing to your Proplend IFISA:
- Click the ‘Banking’ tab from your ISA Dashboard
- Complete the web form to tell us which account your subscripton will be coming from (and where any withdrawals will be paid to)
- You’ll be taken to a screen telling you where to pay your subscription money – you’ll be prompted to tell us how much you’re going to subscribe
- Initiate the payment from your bank taking care to include your unique IFISA Lender ID as the payment reference in the format LENDxxxx-ISAxxx.
You can also fund your Proplend IFISA with transfers of existing ISAs – see 6. below for more information.
2. How soon can I invest to loans after my money is received?
We’ll let you know as soon as your ISA subscription or transfer has been received. You can then hand-select the loan(s) you want to invest in.
3. What is the maximum (annual) ISA allowance?
The maximum allowance for ISA ‘subscriptions’ for the current tax year (2017-18) is £20,000. This limit is subject to change each tax year.
4. What is the minimum investment to Proplend IFISA?
Proplend loans are typically split into £1,000 parts so you will need to subscribe and/or transfer at least £1,000 to your IFISA before you can invest.
For Proplend Loan Exchange investments (purchased after a loan is ‘In Funding’) you’ll also need to pay accrued interest for the month – this way you receive all interest for your loan part(s) on the interest payment date. There’s no accrued interest to pay where you invest from outset of a loan.
5. Can Proplend help me choose which loans to invest in or ‘auto-select’ loans for me
We try to give you as much information as we can about the loan, the borrower and the income producing property to help you make an informed decision but we are not authorised to offer investment advice.
All IFISA loan investments must currently be made on a self selection basis, although we expect to offer an auto-selection option in the not too distant future. Proplend pioneered the P2P lending Tranche model to help Lenders identify investments with risk-reward profiles they’re comfortable with – we cannot make specific recommendations.
6. How do I make an ISA ‘Transfer’ to Proplend?
Log into your Lender Dashboard and click the ‘Transfer ISA’ tab to access our transfer in forms. You’ll need to complete one for each transfer, either completing the form before printing it out or printing it out and then completing it. Both approaches will require an original ‘wet’ signature to be provided when sending the form to us.
We need to collect slightly different information depending on whether it’s a transfer from a Cash ISA, Stocks and Shares ISA or another IFISA so you’ll need to complete the relevant form for the transfer you’re requesting. The transfer in form gives us authority to deal directly with your existing provider. We will send them your completed form with our acceptance and ask them to action the transfer as soon as possible.
We’ll let you know when we have received the transfer payment and allocated it to your ISA account – you’ll then be ready to invest the transferred funds.
7. How do I transfer out of Proplend IFISA?
You will need to complete your new ISA Manager’s transfer in form and send it to them in the first instance. They will contact us directly to formally accept the transfer and initiate the process. Like any ISA provider, we can only transfer cash to your new provider, so you’ll need to sell some or all your Proplend loans (via the Proplend Loan Exchange) to free up the required funds for us to transfer.
You can choose to transfer some or all of your pot out of your Proplend IFISA.
8. Can I track the progress of my transfer?
Once you have sent your transfer form to the receiving ISA Manager – they will deal directly with the transferring ISA Manager. Contact the transferring provider for updates on progress and to ‘chase’ them if you think the process is taking longer than it should. The process should typically take 2-4 weeks depending on the transferring ISA type. Expect the process to take longer where existing holdings have to be sold first.
9. Is the Proplend IFISA flexible?
Yes – any money withdrawn from the ISA in a given tax year can be replaced before the end of the same tax year without being considered as new ISA subscriptions. You don’t have to return the whole amount or know how much you will be returning before the end of the tax year.
Any amount withdrawn that is not returned by the end of the tax year will simply be treated as a permanent withdrawal. You can withdraw current and past year ISA funds flexibly from your Proplend IFISA and the flexible amount available for withdrawal is reset at the beginning of each tax year.
Remember – your available balance is the amount you hold as cash not the total value of your ISA. You can increase the available balance by selling loan investments and it will naturally increase from time to time as loans are repaid. You can make loan investments available for purchase before the end of the loan term through the Proplend Loan Exchange.
10. Do I have to reclaim tax on my IFISA income?
We pay loan interest to you (gross) without deducting any tax. You don’t have to pay tax on ISA income so it avoids any reclaims being required. You don’t have to declare ISA (interest) income on an annual tax return either.
Proplend is not authorised to provide tax advice but we can point you in the right direction for more info. Visit HMRC’s ‘How ISAs work’ page.
11. What happens if I die? Do you provide Additional Permitted Subscriptions?
In the event of your passing away, we will close the ISA and send the proceeds to the appointed representative of your estate. We will provide the estate with a tax voucher equivalent that will explain exactly what is required of the estate. We do not currently offer Additional Permitted Subscriptions (APS), but may consider this in the future. For more information visit HMRC’s ‘If you move abroad or die’ page.
12. What happens if I leave the UK?
Contact us and we’ll talk you through it. Leaving the UK may mean you lose your right to subscribe to ISAs – it depends on your circumstances.
13. How many types of ISA can I hold?
You can hold ISAs of all types and split your annual subscription allowance between those different types. You can also hold ISA monies from previous tax years across the ISA types.
However, you can only subscribe new money to one ISA of each type per tax year. That is one Cash ISA receiving current year subscriptions, one Stocks and Shares ISA receiving current year subscriptions and one IFISA receiving current year subscriptions.
You can open more than one of each type in a single tax year if you’re using additional Cash ISAs, Stocks and Shares ISAs and IFISAs to invest past year ISA monies only (by transferring funds from an existing ISA provider).
14. How can I close my Proplend IFISA?
If you want to close your Proplend ISA, you’ll need to sell all current loan investments (via the Proplend Loan Exchange) and let us know what you want us to do with the balance. You can either request for it all to be transferred to another provider, withdraw it all (where it will no longer be considered ISA money) or withdraw some and request for the rest to be transferred.
Emptying your Proplend ISA is not the same as closing it, so you’ll need to specifically tell us that you’d like us to close it. If you have withdrawn funds from your Proplend IFISA and transferred funds to another ISA Manager before you returned all withdrawn funds, it may be possible to return the funds to us within the same tax year without this payment being considered as new subscriptions.
15. Do I need to ‘sign up’ for a Proplend IFISA every tax year?
No – you only need to open one IFISA with Proplend. The same IFISA can hold different loan investments and ISA monies from past and current years. You will be required to agree to our Terms and Conditions when you first open a Proplend IFISA via your Lender Dashboard. We will let you know each time they change.
16. What information do you report about my IFISA?
We are required to report certain information about your ISA to HMRC each year. This includes the amount subscribed, a valuation of your holdings at the end of the tax year and some personal details. The process is entirely secure and your details are not compromised or shared with any other third parties.
17. Can I transfer in existing (non-ISA) loans into my IFISA
Unfortunately not – ISA rules don’t allow non-ISA peer to peer loan investments to be transferred (‘in-specie’) into an IFISA. You can sell the loans and subscribe the proceeds into your ISA where it can buy other loan parts. A 0.5% fee is payable on the sale of loan parts (before the end of the term) through the Proplend Loan Exchange (PLE).
18. Do you provide Junior ISAs or Lifetime ISAs?