An ISA is an Individual Savings Account which enables you to save and invest tax efficiently. There are four different kinds of ISA: a Cash ISA, a Stocks & Shares ISA, a Lifetime ISA, and an Innovative Finance ISA (IFISA). The maximum annual amount you can invest into an ISA (or a combination of all four) is currently £20,000 (this was the annual limit for 2020/21 tax year and it remains the same for the 2021/22 tax year).
What is an IFISA?
An Innovative Finance ISA (IFISA) allows you to utilise your ISA allowance while investing into Peer to Peer or Marketplace loans. At FOLK2FOLK, your IFISA is invested into property-backed loans to credit-worthy British businesses.
What returns can I expect from my IFISA?
Our IFISA is quite unique in that it is an ‘income ISA’ delivering you your tax-free earnings monthly. The interest rate you receive on your investment is typically 6.5% p.a.
Is it ‘safer’ than a stocks and shares ISA?
There is risk associated with all investments and when investing into any peer to peer/Marketplace loans your capital is at risk and not protected by the Financial Services Compensation Scheme (FSCS). At FOLK2FOLK, all our loans are secured against the tangible assets of land or property and we only lend up to a maximum of 60% of the value of the security to ensure a buffer against a downturn in the property market. To date, no investor has lost any capital via our platform though past performance is not a reliable indicator of future trend.
With low interest rates meaning Cash ISA’s offer a less attractive rate, and if you’ve seen the value of your share portfolio fall, perhaps a secured investment option paying a fixed interest rate of typically 6.5% p.a. tax-free warrants a closer look?
There is risk associated with all investments, and when investing into any peer to peer or Marketplace loans your capital is at risk and not protected by the Financial Services Compensation Scheme. ISA rules apply.