Innovative Finance ISA Information Hub
What is an ISA?
An Individual Savings Account (ISA) is a tax-free way to save or invest. Each tax year you get an ISA allowance from the Government which is the maximum amount you can save into an ISA (or ISAs). For the 2017/18 tax year, this is £20,000.
There are three main types of ISA and you can invest in more than one of these. However an individual can only contribute money to one of each during the same tax year. Here are the main types of ISA and the differences between them:
A Cash ISA is simply a savings account for your cash where you are not taxed on the interest you earn. This allows you to protect the interest your money earns and this does not count towards your Personal Savings Allowance.
Stocks & Shares ISAs
Within a Stocks & Shares ISA you can invest in bonds, funds and shares of individual companies, and the interest and capital gains earned from these investments are tax-free.
Innovative Finance ISAs
The Innovative Finance ISA (or IFISA) is a new category of ISA, allowing you to invest in peer-to-peer lending without having to pay tax on the interest earned.
IFISAs can only be provided by peer-to-peer platforms that have have been fully authorised by the UK’s financial regulator, the Financial Conduct Authority (FCA).
In 2016, LendingCrowd was one of the first platforms to go from interim to full FCA authorisation and is one of the few platforms authorised to provide an IFISA by HRMC.
LendingCrowd offer two ways that you can invest in an ISA:
- The LendingCrowd Growth ISA offers a target rate of 6%* and automatically diversifies your investment across the available loans on our Loan Market
- With our Self Select ISA you choose the loans you want to invest in and you can set your own rate when you bid in Loan Auctions
*If you invest through LendingCrowd you should understand that as a lender, your capital is at risk. The 6% target rate is variable, net of ongoing management fees, estimated bad debt and before the 1% withdrawal fee. LendingCrowd and its products are not covered by the Financial Services Compensation Scheme. Tax treatment depends on the individual circumstances of each client and may be subject to change in future.
Who can open an ISA?
To open a LendingCrowd Innovative Finance ISA, you must:
- be 18 years old or over
- hold a National Insurance number
- be resident in the UK.
If you are interested in opening an ISA with LendingCrowd, you will need to register as an investor first and choose to open a LendingCrowd Innovative Finance ISA.
Once you have opened the ISA you can choose to invest between £1,000 and £20,000 in the IFISA this year. Plus, you can transfer in any other ISAs you may hold.