The Individual Savings Account (ISA) has been around for almost 20 years and in that time has enabled millions of UK savers to invest without paying tax. The Innovative Finance ISA (IFISA) is the latest addition to the ISA family and was introduced in the UK in April 2016.

What is an IFISA?

An IFISA is a ‘tax wrapper’ that allows people to invest in innovative finance products. Interest earned and gains made within the wrapper are exempt from tax. For someone paying UK Income Tax at 45% this means a saving of £450 for every £1,000 interest earned.

What can be included in an IFISA?

Innovative finance products comprise Peer to Peer (P2P) Loans, Debt Securities and Crowdfunded Bonds.

How does an IFISA differ from a Cash ISA?

Money invested in a Cash ISA will typically pay interest of less than 1% pa. In contrast, investing in a P2P loan or a Crowdfunded Bond within an IFISA might pay interest of 5%, 6%, 7% or more. However, these two types of investments carry very different risk profiles and as such, any potential investors should ensure they read all the available information before deciding to invest.

How much can be invested in an IFISA?

Every UK resident over the age of 18 has an annual ISA allowance of £20,000 all of which can be invested in an IFISA.

Can money held in an existing ISA be transferred to an IFISA?

Yes! There is no limit on amounts that can be transferred from another Cash or Stocks & Shares ISA to an IFISA.

ShareIn has been approved by HMRC to act as an ISA manager. We run platforms for some of the UK’s biggest crowdfunding sites many of whom offer their products via an IFISA. If you would like ShareIn to get you up and running with your IFISA business please get in touch.

 

 

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