Warning: Late repayments can cause you serious money problems. For help, go to moneyadviceservice.org.uk
Representative Example: On an assumed loan amount of £750 over 12 months. Rate of interest 292% (fixed). Total repayment amount £1351.20 and total interest is £601.20. 12 monthly payment of £112.60.** We do not know how many customers take out a loan or the APR, this calculation is based on the mean APR of the lenders we work with
Innovative Finance ISAs allow you to earn interest of 6% to 12% through peer to peer investments, whilst using your £20,000 ISA allowance so that all earnings are tax-free.
Whilst a regular cash ISA may only offer up to 1.7% per annum, an Innovative Finance ISA allows you to earn significantly more by investing money into a pool of borrowers who are looking for funds. Using a peer to peer lender, you are matched with individuals and borrowers who have applied for money and based on the risk you take on, the higher your return can be.
You can start investing from as little as £1, although you may need to contribute higher amounts of £500 or £1,000 to reap the largest rewards. Through the Innovative Finance ISA, you are protected for up to £85,000 worth of losses through the Financial Services Compensation Scheme. Use the table provided by My Financial Broker to find the best product for you and start saving today.
If you wish to earn interest on your money, you may wish to consider looking into the main types of ISA. Perhaps the most common ISA is a Cash ISA, but an Investment/Stocks and Shares ISA is also a popular option.
Cash ISAs work almost like a traditional savings account. If you’re a UK resident aged 16 or above, you should be able to open a Cash ISA and save money which earns you interest. The main difference between a bank or building society savings account and a Cash ISA is that with the former, you would need to pay Income Tax on any earnings exceeding £1,000, whereas with the ISA, you don’t pay any tax.
A Cash ISA is generally seen as the safeset ISA option, as your savings won’t be affected by the ups and downs of the market.
These ISAs are also known as Investment ISAs, as your money is invested in assets such as property, bonds and shares. The benefit of a Stocks and Shares ISA is that you can keep anything you earn from your investment after fees and charges are deducted. So you don’t need to pay any tax on any capital gains you make or interest and dividends you earn.
There is some risk involved with a Stocks and Shares ISA, as there is no guaranteed return, and will depend on the fluctuations in the market.
With an Innovative Finance ISA, you are investing in peer to peer investments – but usually you have to pay tax on these and you are only protected by the company’s own compensation scheme.
An Innovative Finance ISA allows you to use your ISA allowance of up to £20,000 – so that any earnings are tax-free and you also get cover through the Financial Services Compensation Scheme. So if the peer to peer lender goes bust or the borrower’s defaults on repayments, you are still covered and able to maintain a strong return on investment.
You are investing in loans for other people and businesses, including personal loans, business loans and secured loans. Each borrower will be assessed beforehand by the lender and you will earn an interest rate based on their profile and credit status. Generally speaking, good credit customers are deemed a lower rate and therefore offer returns of around 6%, with bad credit customers posing higher risk and therefore offering high returns of up to 12%.
Your money remains locked until the end of the loan term that you have selected. So if the borrower’s loan lasts for 3 or 5 years, you will not be able to take out your money during this time. Instead you will need to wait for the loan to run its course, or you can sell the loan to another investor on the portal.
The drawbacks are that you can only have one Innovative Finance ISA and can only invest up to £20,000 per year. However, you can also invest in other ISAs, stocks and shares, provided that it is within your £20,000 allowance.
Yes, your money is provided via the Financial Services Compensation Scheme. However, your returns are not fixed, and will be variable based on how well the borrowers repay their loans. To manage risk and maximise returns, you can invest to multiple people and businesses on the portal. If you would prefer to have a fixed return, see fixed rate ISAs.
The main difference is that an Innovative Finance ISA is tax-free and allows you to use an allowance of up to £20,000.
Peer to peer investments require you to pay tax and state any profits on your self-assessment form. The only advantage of a p2p investment is that you would be able to invest significantly more than the £20,000 limit, but you will be required to pay tax on this.
Use our table provided to compare Innovative Finance ISAs and find the best one for you. You can compare deals by looking at the annual expected return (AER) and the minimum contribution to get set up e.g £1 to £1,000. Make the most of offers such as cashback, cash bonuses and other rewards to boost your returns.
Simply click on the deal and you will be taken directly to their website when you can enter your deals and starting saving right away!Apply Now