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. Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future.
How does LendingCrowd manage your Innovative Finance ISA?
There are two ways to invest in LendingCrowd’s Innovative Finance ISA – The Self Select ISA and the LendingCrowd Growth ISA.
These accounts are the tax-efficient way to invest in our Self Select Account and the LendingCrowd Growth Account. Tax treatment depends on the individual circumstances of each client and may be subject to change in future.
1. LendingCrowd Growth ISA
When you open a LendingCrowd Growth 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 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 is no fixed term and you can sell loans at any time to withdraw cash. Please note that the ability to sell your loans is dependent on other investors purchasing your loan parts.
2. Self Select ISA
The Self Select ISA is for investors who are looking for a more hands on approach to investing. Unlike the LendingCrowd Growth ISA you choose the loans you want to invest in through the Loan Market.
On the Loan Market you can either invest instantly in loans that are for sale or you can bid on a Loan Auction by choosing your interest rate and bid amount. Each month you’ll receive repayments of capital and interest from each loan.
We strongly recommend investors consider spreading their money across multiple loans to avoid their overall return being dependent on the good performance of a few well chosen loans. To find out more on the risks click here.
If you would like to sell an investment you can do this on our Loan Market. All sales are subject to a 0.5% fee and the ability 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 (£20,000 for the 2017/18 tax year) and you want to invest more you can do so via our Self Select Account or LendingCrowd Growth Account.
How much is the ISA allowance?
For the 2017/18 tax year you can invest a maximum of £20,000 in ISAs.
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 one or both of the LendingCrowd ISAs once you are registered with LendingCrowd is quick and easy to do.
Just log into your Investor Account, click ‘Open account’ on the IFISA account you would like to open 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. Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future.
What interest rate could I earn?
The LendingCrowd Growth ISA has a target interest rate of 6%* a year and interest rates for the Self Select ISA start from 5.95%**.
*Variable target rate is net of ongoing management fees and estimated bad debt. Your capital is at risk when you invest.
**If you invest through LendingCrowd you should understand that as a lender, your capital is at risk.
LendingCrowd and its products are not covered by the Financial Services Compensation Scheme. Read more about the risks of investing.
Is the rate of return guaranteed?
No, the rate of return is not guaranteed. The rate of return is dependent on the performance of the loans in your portfolio. Your capital is at risk when you invest.
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.
Can I make a monthly investment into my ISA?
Yes. You can set up a Standing Order from your bank to pay into the 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?
To learn more about our fee structure please visit our fees page.
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 £20,000 in total 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 earnings 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. Our tax statement excludes your earnings within your ISA. Tax treatment depends on the individual circumstances of each client and may be subject to change in future.
How do I make a withdrawal from my LendingCrowd Growth ISA?
Simply go to the withdrawal section of the Manage page and change your Cash Reserve target to the amount you would like to withdraw. Some of your loans will be sold to reach this target amount, and the cash can then be transferred to your Self Select Account to be withdrawn. Please note that there is a 1% fee for transferring funds out of your ISA.
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 please note that the ability to sell your investments depends on other investors purchasing your loans. However, repayments from the loans you hold will also be set aside and contribute to your requested withdrawal amount. Non-performing loans (those that are Overdue or In Arrears) cannot be listed for sale until they are performing.
How do I make a withdrawal from my Self Select ISA?
To withdraw funds from your Self Select ISA you must first list the loans you want to sell for sale. Listing loans for sale will place them on the Loan Market for other investors to buy.
The ability to sell your individual loans is dependent on other investors purchasing them. You still earn interest while the loan is on the Loan Market and what is 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 be withdrawn or hold in cash in your Self Select ISA to transfer to another provider.
Non-performing loans (those that are Overdue or In Arrears) cannot be listed for sale until they are performing.
How do I transfer my IFISA to another provider?
To make your IFISA ready for transfer, you will need to list and sell your investments on the LendingCrowd Loan Market to return your loan holdings to cash. Once your investments have been purchased by other investors, you can transfer out the cash value of your ISA.
You should contact your new ISA provider to arrange the transfer.
Is there a fee for making a withdrawal?
There is no withdrawal fee if you invest through the Self Select ISA, however selling a loan carries a 0.5% fee.
The withdrawal fee for the The LendingCrowd Growth ISA is equal to 1% of the amount of money withdrawn.
Can losses on loans held within my IFISA be offset against income from other LendingCrowd investments?
No, losses on investments held within an IFISA cannot be offset against other chargeable gains made on investments held outside an ISA.
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 FCA rules, crowdlending platforms are required to 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 therefore continue to administer ISA investments. All investor funds are held in a separate Barclays Client Money bank account and therefore do not form part of LendingCrowd’s assets.