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Frequently Asked Questions about IFISAs in 2023

We understand the significance of making informed decisions and to assist you, we present a selection of the most common IFISA inquiries.

18th March 2020

What is an IFISA?

IFISAs give the public the opportunity to get involved in innovative businesses and exciting new markets, and potentially see great returns on their investments — appealing to the entrepreneur inside us all. Launched in 2016, the popularity of Innovative Finance ISAs, or IFISAs, is growing fast.

With average bank interest rates hovering around 1% for nearly a decade, IFISAs are increasingly popular with savers looking to increase their income, as well as with investors looking to diversify their portfolios. IFISAs can both outstrip the levels of return offered by Cash ISAs — although bank savings in Cash ISAs and IFISA investments are very different in terms of risk — and potentially provide less volatile returns than stocks and shares ISAs.

According to the Peer-to-Peer Finance Association, by the end of 2022, investors interested in supporting growing British businesses had subscribed £1 billion through IFISAs across more than 40,000 accounts. For engaged investors looking to support entrepreneurial businesses, and tap into new and exciting markets, an IFISA is an excellent opportunity to explore.

Innovative Finance ISAs give everyone the power to back entrepreneurs and businesses they believe in, whilst funding a vital part of our economy and seeing healthy returns on their investment. 

Why Would You Choose to Invest in an IFISA?

The answer to this question is varied, depending on the type of loan you are making and whether an IFISA is right for you as an individual. Here a few reasons for why you would want to invest in an IFISA.

  • You want to invest in entrepreneurs and support the local economy.
  • You want to support small businesses and develop meaningful relationships with your money.
  • You are an entrepreneurial investor with an interest in where your money goes.
  • You want to be in control of your money and engage with the investment process.
  • You want to receive additional tangible rewards, like new products and services.
  • You want to try investing through a different channel and cut out banks and stockbrokers from the process.
  • You would enjoy investing on an innovative platform when it suits you, online or via a mobile app.
  • You want to diversify your current portfolio.
  • You want to allocate part of your savings to peer to peer lending. It is important to understand that you should only invest what you could realistically afford it because IFISA investments are typically higher risk.

For example, you may also choose an IFISA to complement stocks and shares or cash ISA you already hold, rather than replace them entirely. A cash ISA investor curious about IFISAs may set aside a small amount in an IFISA to add a little more income to their investment portfolio, without sacrificing more security than they are comfortable with.

Some investors simply find IFISAs more interesting as they allow you to engage with the process, decide which businesses you think are good opportunities, and choose the investments you really like.

Key Information You Need to Know About IFISAs

  • You can invest up to £20,000 per tax year and your earnings will be tax-free.
  • You can easily transfer an old ISA free of charge into an Innovative Finance ISA.
  • You can only have one IFISA in a tax year, with one provider.
  • You can use your ISA allowance in a combination of Cash or Stocks and Shares, Innovative Finance or Lifetime.
  • The £4,000 maximum you can put in a Lifetime ISA is part of the £20,000 maximum ISA limit — so you still have £16,000 to invest or save tax-free.

Why a Crowd2Fund IFISA?

  • Maximize Your Allowance: The Crowd2Fund IFISA allows you to incorporate your Crowd2Fund investments within the £20,000 annual allowance, providing you with the benefits of ISAs along with the unique advantages of Crowd2Fund.
  • Combine Tradition with Innovation: While ISAs have a longstanding reputation as a dependable avenue for saving and investing, Crowd2Fund enhances this experience by offering impressive returns, flexibility, and outstanding service, all supported by cutting-edge technology.
  • Tax-Free Investment: Safeguard up to £20,000 of your Crowd2Fund investments from tax liability each year, allowing your returns to accumulate without the burden of taxation.
  • Attractive Returns: Earn an estimated tax-free annual percentage rate (APR) return of 6-15% before fees and potential bad debt, providing a compelling opportunity for wealth accumulation.
  • Support Entrepreneurs, Boost the Economy: By participating in the Crowd2Fund IFISA, you actively contribute to the growth of British entrepreneurs and the economy. You have the agency to select and invest in innovative businesses that align with your interests.
  • Seamless Transfer and Accessibility: Transitioning your existing ISA to your Crowd2Fund account is a straightforward and hassle-free process, enabling you to consolidate your investments seamlessly. Moreover, the possibility of accessing your capital is facilitated by the option to sell your investments to fellow investors through the Exchange.
  • Automated Investing with Smart-Invest: The Smart-Invest feature empowers you to manage your investments automatically, streamlining your investment strategy while leveraging the potential of the Crowd2Fund platform.
  • Renowned IFISA Choice: Crowd2Fund stands out as a top-tier choice for your IFISA investments. Our platform was among the pioneers in offering the Innovative Finance ISA, and our commitment to innovation has been recognized by consecutive wins of the 2022 Moneynet Awards for 'Most Innovative P2P Platform'.

Choosing a Crowd2Fund IFISA means embracing the best of traditional ISAs and forward-thinking financial solutions. With the potential for remarkable returns, unparalleled service, and the chance to support pioneering British businesses, it's a strategic move that aligns with your financial goals.

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Risk warning

Past performance and forecasts are not reliable indicators of future results. Your capital invested is not covered for compensation in the event of a loss by the FSCS. Tax treatment will depend on the individual circumstances and may be subject to change. Please see our Risk section before making an investment decision.