Offering higher interest rates than the traditional Cash and Stocks and Shares ISAs, the Innovative Finance ISA (IFISA) is a new way to make the most from your investments. The IFISA allows you to lend money to UK-based small and medium-sized enterprises (SMEs) while receiving tax-free interest and capital gains. Recognising the incredible potential in this high-return investment opportunity, we are introducing IFISAs to clients looking to make the most of their annual ISA allowance.
How does the Innovative Finance ISA product work?
While other Cash and Stocks & Shares ISAs typically produce an average interest in the region of 1% to 1.5% per annum, holders of the Innovative Finance ISA can anticipate a return of around 7%. The IFISA works by allowing investors to lend money to UK small and medium-sized enterprises (SMEs) through Financial Conduct Authority (FCA) regulated Peer-to-Peer (P2P) lending platforms.
In a given tax year, it is only possible to purchase one IFISA, one Cash ISA and one Stocks and Shares ISA. However, if you are currently holding money in Cash ISAs bought in previous tax years, you are eligible to transfer that money.
In making this move, you can annually generate much higher income. For instance, a married couple could invest up to £40,000 per annum – and generate tax-free interest of up to £2,800 every 12 months. During the tax year, you are also free to withdraw any income before returning it to your investments account – without taking up any of your annual ISA allowance.
How to apply for an Innovative Finance ISA
To be eligible to invest in an IFISA you must meet the following criteria:
• You must be at least 18 years old and be a UK resident for tax purposes
• You must have a National Insurance Number
• You must have a UK bank account
Please note that there is a 1% fee per annum for owning any IFISA. Your capital is at risk, and P2P lending is not currently protected by the Financial Services Compensation Scheme (FSCS).