Peer-to-peer (P2P) platform Funding Circle is to become the latest firm to offer an Innovative Finance Isa (IF Isa).
In an email to its customers seen by Moneywise and confirmed directly with Funding Circle, the provider says it will allow existing customers to invest in an Isa from Thursday 30 November.
It has yet to announce a launch date for new customers and says this is because it is anticipating strong demand for the product. For the same reason, customers will not be able to transfer existing Isas to Funding Circle when the product is launched.
Customers must deposit at least £1,000 to open an Isa.
Funding Circle is one of the three biggest peer-to-peer providers and is the second to launch an IF Isa.
Zopa launched an Isa in the summer, although the entire platform remains closed to new consumers. It hopes to re-open before the end of 2017. The third biggest player in the sector, RateSetter, plans to launch an Isa but has not yet done so.
James Meekings, managing director of Funding Circle, says: “We’re excited to be launching our Innovative Finance Isa, offering investors attractive stable returns that are tax-free.
“To date investors have earned £156 million of net interest, more than 6% per year since 2010. This is fuelling economic growth, helping businesses in all sectors across the country to grow and thrive."
What is an IF Isa?
The IF Isa works in much the same way as a Stocks and Shares Isa; your investment is held within a tax-free wrapper and any growth is not subject to tax.
Investors have a £20,000 Isa allowance for the 2017/18 tax year. This total can also include Cash Isas and Stocks and Shares Isas, although the combined amount invested during the tax year must not exceed the limit.
But remember that an IF Isa is an investment product, and your deposits are not protected by the Financial Services Compensation Scheme.
For more information on IF Isas read Moneywise’s investigation into the peer-to-peer market.