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Innovative Finance ISA information hub

LendingCrowd IFISA FAQs

 

What’s an Innovative Finance ISA?

Also known as an IFISA, it lets investors include their peer-to-peer lending investments in an ISA. This means there’s no tax to pay on your returns. It’s subject to the same rules on eligibility and investment limits as other types of ISA. Please note that tax treatment depends on the individual circumstances of each investor and may be subject to change in future.

 

How can I invest in a LendingCrowd IFISA?

We offer three IFISAs for peer-to-peer investors –the Growth ISA, the Income ISA and the Self Select ISA.

These accounts are the tax-efficient way to invest in our Growth Account, Income Account and Self Select Account. Tax treatment depends on the individual circumstances of each investor and may be subject to change in future.

 

LendingCrowd Growth ISA

The Growth ISA is aimed at investors who want a quick and simple method of creating a diversified portfolio of asset-backed P2P loans. It automatically diversifies your investment across the loans available on our Loan Market and the minimum investment is £1,000.

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 Growth 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’s no fixed term and you can sell investments at any time on our Loan Market if you want to withdraw your funds. There’s a withdrawal fee of 1% of the capital withdrawn. Please note that the ability to sell your investments depends on other investors buying your loans.

 

LendingCrowd Income ISA

The Income ISA is designed for those seeking to generate a consistent level of income from a lump sum without eating into their capital. It works in a similar way to our Growth ISA, with your minimum investment of £1,000 automatically spread across all the loans available on our Loan Market.

The key difference is that your interest payments are transferred to a separate account for you to withdraw – with no fees – while your capital repayments are automatically reinvested.

If you want to withdraw your funds, you can sell investments on our Loan Market, but you need to have at least £1,000 invested to meet your target rate of return and continue investing in loans. There’s a withdrawal fee of 1% of the capital withdrawn. Please note that the time taken to access your funds depends on how quickly your holdings are sold.

 

LendingCrowd Self Select ISA

The Self Select ISA is for experienced P2P investors who have the time to hand-pick which businesses they want to lend to, making sure borrowers match their appetite for risk. To achieve good returns, you’ll need to reinvest your capital and interest repayments on a regular basis. The minimum investment is £20.

You can either invest instantly in loans that are for sale, or you can bid on the Loan Market by choosing your interest rate and bid amount. Each month you’ll receive repayments of capital and interest from each loan.

We strongly recommend that you review each business carefully and spread your money across multiple loans. Remember that diversification is key to mitigating risk.

If you want to sell an investment, you do this on our Loan Market. There’s a 0.5% fee for selling your loan parts. The ability to sell investments depends on other investors buying your loans.

 

Can I transfer existing ISAs into the LendingCrowd IFISA?

Yes. To get this process started, download and complete our ISA transfer form and post it to us. We’ll take care of the entire transfer process.

 

If I transfer an existing ISA to LendingCrowd, will it maintain its tax benefits?

Yes. Making a provider-to-provider transfer ensures your ISA maintains its tax-free status. Tax treatment depends on the individual circumstances of each investor and may be subject to change in future.

 

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 IFISA.

If you’ve subscribed to the maximum amount in your LendingCrowd IFISA (£20,000 for the current tax year) and want to invest more, you can do so via our Growth Account, Income Account or Self Select Account.

 

How much is the ISA allowance?

For this tax year, you can invest a maximum of £20,000 in ISAs.

 

What happens if I pay too much into my IFISA?

We prevent you investing more than the ISA allowance for each tax year. However, if you have more than one ISA provider, it’s up to you to make sure you don’t exceed the ISA allowance across all your accounts. If you do exceed that total, HM Revenue & Customs will tell you and your ISA provider about any action that needs to be taken.

 

I have a LendingCrowd account but I haven’t opened an IFISA. How can I do this?

It’s quick and easy to open one or both of the LendingCrowd IFISAs once you’re registered with us.

Log into your Investor Account, click ‘Open account’ on the IFISA account you’d like to open and follow the instructions. We’ll already have your details, so all you’d have to do is tell us your National Insurance number and accept the ISA declaration and terms.

 

What are the tax benefits of a LendingCrowd IFISA?

Within a LendingCrowd IFISA, you don’t pay tax on interest earned from peer-to-peer loans. Please note that tax treatment depends on the individual circumstances of each investor and may be subject to change in future.

 

What interest rate could I earn?

The Growth ISA has a target rate of 6%* a year, the target rate for the Income ISA is 5.6%* and rates for the Self Select ISA start from 5.95%**.

*Capital at risk. Target rate is variable, net of ongoing repayment fees and bad debt.

**Capital at risk. Investors can lend at rates between 5.95% and 16.25% based on LendingCrowd’s Credit Bands. Interest rates are guided by the credit grading allocated to each loan. Higher risk investments may yield greater returns but can also lead to lower returns if the business can’t fully repay its debts. This is known as bad debt. Find out more at our Risk matters page.

 

Is the rate of return guaranteed?

No. The rate of return depends on the performance of the loans in your portfolio. As an investor, it’s important to remember you’re lending to businesses so your capital is at risk.

 

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. You can read more about the risks of investing on our Risk Matters page

 

Can I make a monthly investment into my IFISA?

Yes. You can set up a standing order from your bank to pay into your LendingCrowd IFISA on a regular basis. You can stop and start your regular payments or change the amount at any time – you’re in control. We’ll tell you if you exceed the ISA subscription limit with us.

 

What are the fees?

To learn more about our fee structure, please visit our fees page.

 

Can I have more than one IFISA?

Yes, but you can only invest in one IFISA in any single tax year. This means you could open one IFISA this year and in future years open additional IFISAs.

 

How many ISAs can I have?

In a single tax year, you can open and invest in one Cash ISA, one Stocks & Shares ISA, one Lifetime ISA and one IFISA. The total you pay in must not exceed £20,000 this tax year.

 

Who can have an IFISA?

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 earnings on my tax return?

No. Your ISA earnings are exempt from tax and there’s no need to declare them, provided you meet the ISA rules. Our tax statement excludes your earnings within your ISA. Tax treatment depends on the individual circumstances of each investor and may be subject to change in future.

 

How do I make a withdrawal from my Growth ISA or Income ISA?

Simply go to the withdrawal section of the Manage page and change your Cash Reserve target to the amount you’d like to withdraw. Some of your loans will be sold to reach this target amount, and you can then transfer the cash to your Self Select Account to withdraw it. Please note there’s a withdrawal fee of 1% of the capital withdrawn from the Growth ISA and Income ISA.

LendingCrowd oversees this entire process on your behalf and we’ll automatically seek buyers for your loans on the Loan Market. We’ll do this as quickly as possible but please note that the ability to sell your investments depends on other investors buying your loans. However, repayments from the loans you hold will also be set aside and contribute to your requested withdrawal amount.

You can’t list non-performing loans (those that are overdue or in arrears) for sale until they’re performing.

 

How do I make a withdrawal from my Self Select ISA?

You first have to list the loans you want to sell. Listing loans for sale will place them on the Loan Market for other investors to buy.

The ability to sell your individual loans depends on other investors buying them. You still earn interest while the loan is on the Loan Market and money due to you will be paid at the end of the month when the borrower makes a repayment. Once your loans have sold, you can transfer the cash to your Self Select Account to withdraw it, or hold it in your Self Select ISA to transfer to another provider.

You can’t list non-performing loans (those that are overdue or in arrears) for sale until they’re performing.

 

How do I transfer my IFISA to another provider?

First you’ll need to list and sell your investments on our Loan Market to return your loan holdings to cash. Once other investors have bought your investments, you can transfer out the cash value of your IFISA. You should contact your new ISA provider to arrange this.

 

Is there a fee for making a withdrawal?

There’s no withdrawal fee if you invest through the Self Select ISA, but selling a loan carries a 0.5% fee.

The withdrawal fee for the Growth ISA and Income ISA is 1% of the capital being withdrawn.

 

Can losses on loans held within my IFISA be offset against income from other LendingCrowd investments?

No, you can’t offset losses on investments held within an IFISA against other chargeable gains made on investments held outside it.

 

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.

 

What happens if LendingCrowd goes out of business?

If LendingCrowd were to go out of business, investors would still continue to receive repayments on loans originated with LendingCrowd, because all loan contracts are between borrowers and investors and would remain valid.

Under Financial Conduct Authority rules, peer-to-peer platforms must appoint a third party standby servicing company to administer the loan book in the event of the platform ceasing operation. LendingCrowd has appointed Nostrum Group as its standby servicing partner to oversee the repayment of loans should this situation arise. Nostrum Group is also an ISA manager and would continue to administer ISA investments.

All investor funds are held in a separate Barclays Client Money bank account and don’t form part of LendingCrowd’s assets.

If you invest through LendingCrowd you should understand that your capital is at risk.

LendingCrowd is the trading name of Edinburgh Alternative Finance Limited, Company Number SC468392, authorised and regulated by the Financial Conduct Authority (Firm reference number 670991). LendingCrowd and its products are not covered by the Financial Services Compensation Scheme.

Read more about the risk involved when investing and borrowing.

LendingCrowd is a credit broker and not a lender.

The company's registered office is 23 Manor Place, Edinburgh, EH3 7DX.

Copyright © LendingCrowd 2018. All rights reserved.

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