FOLK2FOLK Chairman Tim Sawyer CBE Urges Chancellor to Include IFISAs in Ongoing ISA Discussions

FOLK2FOLK, the UK’s largest peer-to-peer business lender, has submitted an open letter to Chancellor Rachel Reeves, urging the government to recognise Innovative Finance ISAs (IFISAs) as a vital component of the UK’s tax-free investment landscape.

The appeal comes as the government continues to deliberate on potential ISA reforms aimed at encouraging greater investment in UK stocks to help drive economic growth. While there had been speculation about announcements in this month’s Spring Budget, recent reports indicate that reforms have been deferred for further discussion.

So far, discussions have primarily focused on cash ISAs and stocks and shares ISAs, with proposals such as capping cash ISA holdings and merging cash ISAs with stocks and shares ISAs to simplify the system.

But IFISAs, which were introduced by the government in 2016 and allow investors to hold peer-to-peer loans, have been largely absent from these conversations despite their significant role in channelling private investment into UK SMEs and offering tax-free fixed-income returns to investors.

As ISA reforms remain under discussion, the letter, signed by Tim Sawyer CBE, a prominent financial services leader, former CEO of The Start Up Loans Company and Chairman of FOLK2FOLK, highlights the importance of ensuring IFISAs are not overlooked.

He notes that according to latest HMRC data published last year, IFISA investments grew by 46%, reflecting increasing investor demand for tax-free, fixed-income alternatives.

“ISA reform should not be about reducing investor choice but ensuring consumers are aware of all available options,” states Sawyer.

“IFISAs already serve a vital function helping private investors earn tax-free fixed income while supporting UK businesses. With growing investor demand, it’s time for IFISAs to be recognised as a valuable option within the ISA landscape.” 

Key points from the open letter to Chancellor Rachel Reeves include:

• Calls for IFISAs to be fully recognised in ISA discussions and included in consumer education efforts.
• Highlights rising investor demand, with latest HMRC data showing IFISA investment growth of 46%.
• Warns against oversimplification that could reduce investor choice, advocating for a diverse range of tax-free savings and investment options.
• Emphasises the role of IFISAs in mobilising private capital into UK SMEs, supporting business growth, and contributing to national economic resilience.
• Acknowledges that IFISAs are not suitable for every investor, but for those seeking tax-free, fixed monthly income, they offer a valuable alternative.

FOLK2FOLK is the UK’s largest peer-to-peer business lending platform by cumulative lending, having facilitated over £750 million in loans to regional UK businesses.

Read the full letter here.