What is an Innovative Finance ISA?
The IFISA gives you the opportunity to use your annual ISA allowance to lend funds through investments such as Loan Based Crowdfunding or Peer-to-Peer (P2P) Lending and Crowd funded Debt Securities. An ISA is an Individual Savings Account and is not a product in its own right. An ISA is effectively a 'wrapper' in which you can shelter savings and investments from tax.
There are multiple types of ISA available such as Cash ISAs, Stocks and Shares ISAs, our Innovative Finance ISA, and the Lifetime ISA.
You can put money into one of each kind of ISA, up to a set limit, each tax year. This limit is known as your ‘ISA allowance’. Any returns or gains made from money placed in an ISA are not subject to income and capital gains tax.
An Innovative Finance ISA (IFISA) is the latest in a long line of ISA products. ISAs were introduced at the beginning of the tax year, 6th April 1999, replacing the Personal Equity Plans (PEPs; similar to a Stocks and Shares ISA) and Tax-Exempt Special Savings Accounts (TESSAs; very similar to a Cash ISA).
The difference between a Cash ISA, a stock and shares ISA and an Innovative Finance ISA
Cash ISAs can include savings in bank and building society accounts and some National Savings and Investments products. Stocks & Shares ISAs can include shares in companies, unit trusts and investment funds, corporate bonds and government bonds. Innovative Finance ISAs can include Peer-to-Peer Loans (loans that you give to other people or businesses without using a bank) and Crowdfunding Debentures (investing in a business by buying its debt).
Your annual ISA allowance
The annual ISA allowance may vary each tax year. The ISA allowance for 2018-19 tax year is £20,000. You may wish to consult the government website for updates and changes to the annual ISA allowance.
You can have one of each type of ISA each tax year, so long as the total amount invested into your ISA is within the limit of the annual ISA allowance. For example, you can subscribe to one cash ISA, one stock and shares ISA and one Innovative Finance ISA in each tax year. In the next tax-year you can subscribe to an additional ISA of each type again.
You must be 18 or over (16 or over for a Cash ISA), a resident in the UK or a Crown servant (e.g. diplomatic or overseas civil service) or their spouse or civil partner if you do not live in the UK. You cannot hold an IF ISA with or on behalf of someone else.
How do I get started?
You may set up your IFISA by registering for an Assetz Capital account here:
If you are an existing Assetz Capital account holder you may log into your account and choose the ‘IFISA’ option on your Dashboard page. You will need to have your National Insurance Number to hand to complete the process. To avoid making deposits to multiple accounts, all deposits will be made into your standard account.
Once the funds have been received, you may then place them in your ISA account by transferring cash from your standard investment account. All subscriptions must be in cash.
Once you have successfully subscribed funds to your Assetz Capital IFISA, your cash will be available to invest and earn interest free of tax. You do this by allocating funds to the various investment accounts on your dashboard.
If you have more ISA questions please take a look at our IFISA Frequently Asked Questions section.
- April 17, 2018