Innovative Finance ISA Information Hub
LendingCrowd IFISA FAQs
What is an Innovative Finance ISA?
It’s a new type of ISA, which lets investors include their peer-to-peer lending investments in an ISA. This means there is no personal tax to pay on any profits you make. It’s subject to the same rules on eligibility and investment limits as other types of ISA.
How does LendingCrowd manage your Innovative Finance ISA?
The LendingCrowd Innovative Finance ISA is the tax-efficient version of our LendingCrowd Growth Account.
When you open a LendingCrowd Innovative Finance ISA, with one click your money is invested across loans on the LendingCrowd Loan Market. £1,000 is the minimum investment.
Your repayments are reinvested in additional loans, diversifying your investment further. Your money will always be invested in a minimum of 20 loans with no more than 5% of your investment held in one loan.
With the LendingCrowd Innovative Finance ISA you don’t need to spend a lot of time choosing loans and constantly monitoring your investments, we do all this for you. There is no fixed term and you can sell loans at any time to withdraw cash. Note, the time it takes to sell your loans is dependent on other investors purchasing your loan parts.
Can I transfer existing ISAs into the LendingCrowd Innovative Finance ISA?
Yes, you can. To get this process started, download and complete our ISA transfer form and send it to us by post. We’ll take care of the entire transfer process.
If I transfer an existing ISA to LendingCrowd, will it maintain the tax efficiencies?
Yes, if you make a provider-to-provider transfer to ensure your ISA maintains its tax-free status.
Can I invest more than the ISA limit with LendingCrowd?
You can invest as much as you want with LendingCrowd, but you have to adhere to the ISA allowance within the LendingCrowd Innovative Finance ISA.
If you have subscribed to the maximum amount in your LendingCrowd Innovative Finance ISA (£15,240 for the 2016/17 tax year) and you want to invest more you can do so via our LendingCrowd Self Select Account or LendingCrowd Growth Account.
How much is the ISA allowance?
For the 2016/17 tax year you can invest a maximum of £15,240 in ISAs.
This is changing for the 2017/18 tax year and you will then be able to subscribe up to £20,000.
What happens if I pay too much into my ISA?
We prevent you investing more than the ISA allowance for each tax year. However if you have more than one ISA provider, it is up to you to make sure you don’t exceed the ISA allowance across all your accounts. If you do exceed that total, HMRC will notify you and your ISA provider of any corrective action.
I have a LendingCrowd account but I haven’t opened an Innovative Finance ISA. How can I do this?
Opening a LendingCrowd Innovative Finance ISA once you are registered with LendingCrowd is quick and easy to do.
Just log into your Investor Account, click ‘Open account’ and follow the instructions. We will already have your details, so all we need in addition is your National Insurance number and then your acceptance of the ISA declaration and terms.
What are the tax benefits of a LendingCrowd Innovative Finance ISA?
Within a LendingCrowd Innovative Finance ISA, interest earned from peer-to-peer lending loans is tax-free.
What interest rate could I earn?
The LendingCrowd Innovative Finance ISA has a target interest rate of 6%* a year.
*Variable target rate is net of ongoing management fees and estimated bad debt.
Is the rate of return guaranteed?
No, it’s a variable target rate and you should be aware that the return could be higher or lower. This all depends on the performance of the loans in your portfolio.
Is there any risk involved?
There is a risk that the value of your investment could fall. The main risk is that the companies who borrow money fail to make their repayments. We have a rigorous credit screening process so that we fully understand the risk exposure for each borrower.
You can see the performance of our loan book to date on our Statistics page.
Can I make a monthly investment into my ISA?
Yes. You can set up a Standing Order from your bank to pay into your LendingCrowd Innovative Finance ISA on a regular basis. You can stop and start your regular payments or change the amount at any time – you are in control. We will inform you should you exceed the ISA subscription limit with us.
What are the fees?
If you decide to make a withdrawal there will be a withdrawal fee equal to 1% of the amount you’re withdrawing.
Can I have more than one Innovative Finance ISA?
Yes but you can only invest in one Innovative Finance ISA in any single tax year. This means you could open one Innovative Finance ISA this year and in future years open additional Innovative Finance ISAs.
How many ISAs can I have?
In a single tax year you can open and invest in one Cash ISA, one Stocks & Shares ISA and one Innovative Finance ISA. The total you pay in must not exceed £15,240 in total for 2016/17 and £20,000 for 2017/18.
Who can have an Innovative Finance ISA?
Anyone who is at least 18 years old and is resident in the UK. You can also apply if you’re a Crown employee (such as a member of the armed forces or civil servant) serving abroad, or the partner of a Crown employee. You don’t need to be a taxpayer to have an ISA but you must have a National Insurance number.
Can I open an ISA on behalf of someone else?
Only if you have a Lasting Power of Attorney for the person you want to open the ISA for. If that’s the case, please call us on 0345 564 1600 to discuss the application.
Do I have to declare my ISA profits on my tax return?
No. Your ISA earnings are exempt from tax and there is no need to declare them provided you meet the ISA rules. Our tax statement excludes your earnings within your ISA.
How do I make a withdrawal from my LendingCrowd Innovative Finance ISA?
Simply go to the withdrawal section of the Manage page and enter the amount you would like to withdraw. To withdraw money, some of your loans will have to be sold and transferred into cash before you can access them.
LendingCrowd oversees this entire process on your behalf and will automatically seek buyers for your loans on the LendingCrowd Loan Market. We will do this as quickly as possible but the time it takes depends on the amount of demand from fellow investors for your loans. However, repayments from the loans you hold will also be set aside and contribute to your requested withdrawal amount.
Is there a fee for making a withdrawal?
Yes, the charge is equal to 1% of the amount of money withdrawn.
Is the LendingCrowd IFISA covered by the Financial Services Compensation Scheme (FSCS)?
No, peer-to-peer lending isn’t the same as having a bank or building society account and isn’t covered by the FSCS.