Innovative Finance ISA

Simply explained

What does an Innovative finance ISA do?

They are similar to cash and S&S ISAs but designed to be used with applicable peer-to-peer lending investments. This means you can use your money to lend as debt instead of holding as cash or investing in the stock market. Innovative finance ISAs can be a lot of things, from peer-to-peer lending to lending to businesses, property and crowdfunding. Open an innovative finance ISA and it means any interest you get from lending money to other people (or companies) isn't taxed. When investing into a innovative finance ISA this will count toward your £20,000 ISA limit



What to look out for and fees:

Only platforms with full FCA authorisation (and ISA manager status) are eligible to offer innovative finance ISA. Peer to peer lending is more risky than putting money into a cash ISA. The fact you're lending the money means there's a chance the borrower won't repay. Risks are mitigated by spreading your cash across multiple loans, or provider-backed safeguard funds.

 

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