A number of Innovative Finance ISAs (IFISA) are being launched over the summer months, providing peer-to-peer investors with plenty of choice on where to utilise their tax-free allowance.
P2P property lender Invest & Fund unveiled the full launch of its IFISA last month, offering investors target returns of 7.5 per cent from residential property developments.
Meanwhile, another P2P property lender, FutureBricks, is planning to unveil its own IFISA by the end of the month. The platform is waiting on permissions from HMRC and already has 100 of its investors on a waiting list to use the IFISA.
Additionally, P2P education finance provider Lendwise has promised an IFISA by the end of this year, which it said would expand its investor reach and appeal.
The flurry of new IFISA launches offsets some of the product closures in the market.
Platforms such as Growth Street, ThinCats and Landbay have shifted from retail to institutional funding, meaning they can no longer offer an IFISA.
As of 19 June, RateSetter was not taking on new investors as part of its approach to the coronavirus pandemic, while Funding Circle temporarily closed to new retail money while it focuses on providing finance under the coronavirus business interruption loan scheme.
Lending Works, which launched one of the first IFISAs, closed to new customers in April and has since extended this ‘normalisation period’ until October. Other major lenders such as Zopa are still open to new IFISA subscriptions and Assetz Capital is due to reopen to new investor money this month.
David Genn, chief executive of IFISA technology provider Goji, said that the product “remains an important wrapper for investors looking to ensure their P2P investments are tax-efficient” and “gives them the opportunity to consider using ISA balances built over the years to diversify into P2P”.
However, he highlighted that the wrapper offers no further protection to investors so they need to do the same level of due diligence as for investments outside of the IFISA.
“ISA account opening, inflows and transfers have been consistent throughout 2020, however that has not been the ISA season ‘peak’ that we saw in previous years, almost certainly due to uncertainty during the lockdown,” Genn said.
“Goji has inbound queries from platforms considering offering an ISA or looking to improve efficiency and scale from partnering with a specialist provider on an almost daily basis.”
Median ISA balances are typically between £10,000 to £20,000 per platform and the maximum ISA balance is over £300,000 for some platforms, he added.