7th June 2024
With the end of the tax year on the horizon, now is the perfect time to consider how to make the most of your savings. If you’re looking for a tax-free investment option that supports UK businesses while offering the potential for strong returns, the Innovative Finance ISA (IFISA) might be your ideal choice.
What Is an IFISA?
An Innovative Finance ISA (IFISA) allows you to invest tax-free in peer-to-peer (P2P) loans or crowdfunding opportunities. Unlike Cash ISAs or Stocks and Shares ISAs, IFISAs give you the ability to lend directly to businesses, earning interest on your investments rather than relying on dividends or savings rates.
Here’s what sets IFISAs apart:
- Higher Returns: While Cash ISAs currently offer low interest rates, IFISAs can deliver annual returns ranging between 12% and 18% depending on the investment grade​.
- Direct Control: With platforms like Crowd2Fund, you can hand-pick the businesses you believe in, aligning your investments with your values and goals.
- Tax-Free Growth: Like all ISAs, any interest earned through an IFISA is completely free from income tax.
Why Should You Consider an IFISA?
- Maximise Your Tax-Free Allowance
Each tax year, you can invest up to £20,000 across various ISAs. IFISAs allow you to utilise this allowance efficiently, especially if you’re seeking higher returns than a traditional savings account. Unused allowances can’t be rolled over, so acting before the tax year ends on 5th April ensures you make the most of your tax benefits​.
- Support Innovative UK Businesses
The UK’s small and medium-sized enterprises (SMEs) are the backbone of our economy, driving innovation and job creation. With IFISAs, your investment directly supports these businesses, providing the capital they need to grow while you earn a return on your investment.
- Diversify Your Portfolio
Diversification is key to managing risk, and IFISAs offer an opportunity to spread your investments across multiple businesses and sectors. Platforms like Crowd2Fund also allow you to trade loans on their Exchange, providing added flexibility​.
- Transparency and Engagement
Unlike pooled investments where your money is spread automatically, IFISAs allow you to choose the businesses you want to back. This means you can engage directly with innovative entrepreneurs and track their progress.
Is an IFISA Right for You?
IFISAs are a great option for entrepreneurial investors looking for an alternative to traditional savings or stocks. However, it’s important to understand that they carry higher risks compared to Cash ISAs, as they depend on businesses repaying their loans. To mitigate this, you can:
- Diversify your investments across multiple businesses.
- Reinvest repayments to benefit from compound interest.
- Perform due diligence by reviewing the businesses you invest in.
Why Choose Crowd2Fund?
Crowd2Fund was one of the first FCA-authorised platforms to offer the IFISA and remains a trusted leader in peer-to-peer lending. With Crowd2Fund’s IFISA, you’ll benefit from:
- A flexible, tech-forward platform to manage your investments.
- The ability to choose the businesses you back.
- Potential returns between 12% and 18% before fees and bad debt.
Take Control of Your Investments
An IFISA gives you the power to make meaningful investments while achieving tax-free returns. If you’re ready to make the most of your ISA allowance and support UK businesses, now is the time to get started.
Register with Crowd2Fund today and discover how your investments can deliver returns while driving positive economic impact.
Risk Warning:
Access to the exchange is not guaranteed and is subject to Crowd2Fund’s regulations, terms and conditions which can change from time to time. You should not rely on the exchange for liquidity as not all investments are suitable for listing on the exchange, and there is no guarantee of finding a buyer for your investment if it is listed on the exchange.
