Octopus launches Innovative Finance Isa targeting 4% return

9 August 2017

Octopus has become the latest provider to launch an Innovative Finance Isa (IF Isa), targeting returns of 4% on property-based investments.

The provider says it has launched the Octopus Choice Isa because consumers are looking to beat the poor rates offered by savings accounts.

Investors can open the account with balances of £10 or more. All loans are made to property professionals developing residential and commercial property in the UK. There are no up-front or ongoing fees charged by this account.

Sam Handfield-Jones, head of Octopus Choice, says: “I believe at a time of low interest rates, rising inflation and ever-present stock market instability, an alternative tax-efficient investment solution has never been more important or valuable to investors.  We are thrilled that we can now help them include Octopus Choice within their Isa planning.”

What is an Innovative Finance Isa?

The Innovative Finance Isa was launched on 6 April 2016 and works in much the same way as a Cash Isa or Stocks and Shares Isa – the key difference is that savings made using the IF Isa are not protected by the Financial Services Compensation Scheme, so your capital is at risk.

Consumers can use all or part of their yearly Isa allowance in an IF Isa, with no tax paid on any earnings within the Isa wrapper.

The annual Isa limit for the 2017/18 tax year is £20,000, and this can be split between different types of Isa as long as you do not exceed the overall limit. For example you could save £10,000 in a Cash Isa plus £10,000 in an Innovative Finance Isa during the current tax year.

According to HMRC there are more than 50 providers authorised to offer an Innovative Finance Isa, as of 25 July 2017. Some of the better known firms include Crowdstacker, LendingCrowd, Lending Works and Zopa.

Lending Works  won the Best P2P (peer-to-peer) Lender for Savers category and Zopa won the Most Trusted P2P Provider category at the Moneywise Customer Service Awards 2017.

A full list is available on the HMRC website.


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