Peer-to-peer (P2P) platform RateSetter has launched an Innovative Finance Isa (IF Isa), although it will initially be restricted to existing customers.
The IF Isa will be available to all existing customers from today, Thursday 8 February 2018, before opening to new customers on Thursday 1 March. Transfers from other Isas will be allowed from April onwards.
The platform targets a return of between 3% and 6%, depending on the level of risk and access to funds that customers require. As with all Innovative Finance Isas, customers can invest up to £20,000 in a tax year.
The RateSetter Isa is flexible, meaning investors can withdraw money and replace it without using up their tax-free allowance.
Rhydian Lewis, chief executive of RateSetter, says: “RateSetter’s purpose is to give people the opportunity to earn more on their money. Our Isa makes that opportunity even more compelling because investing is now tax-free.
“Cash Isa savers are frustrated with low interest rates, while inflation is always nibbling away at their money. Stocks & Shares Isa investors have enjoyed good returns recently but may be nervous of market falls, as demonstrated in the last few days. Lending is a third asset class in the middle, offering the potential for higher returns than cash without the volatility of shares.”
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.
However, 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.