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Benefit from a new type of ISA

Could Innovative Finance ISAs be a good way to invest tax-free?

What's an Innovative Finance ISA (IFISA)?

While still a drop in the ocean, the amount invested through peer-to-peer (P2P) lending products has grown dramatically over the last few years, with Brits investing £3 billion in 2016 alone (source: Moneywise). The IFISA was introduced a few years ago to allow investors to include interest earned through eligible P2P lending products within the popular ISA wrapper.

ISAs at a glance

£

20,000

Maximum ISA allowance for 2018/19

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Cash ISA

A savings account where you don't pay tax on your interest.

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Innovative Finance ISA

An alternative ISA that lets you invest in eligible P2P lending products. Not covered by the FSCS.

Find out more arrow-right
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Stocks & shares ISA

Access to a wide range of investment opportunities. Riskier and more volatile than cash, but potentially higher returns.

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Lifetime ISA

Targeted at first-time homebuyers or those saving towards retirement. Must be under the age of 40.

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Help To Buy ISA

An ISA for first-time homebuyers, who receive a bonus of 25% from the government once they have reached the minimum threshold.

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Junior ISA

An ISA for children under the age of 18. It can be held in cash or stocks and shares, and the annual allowance is £4,260 (in 2018/19).

Key things to consider before openng an IFISA

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1

Assess your situation

Are you comfortable with the risks? It's not suitable for everyone, and those who decide to try it should make sure it's right for them.

2

Where is your money being invested?

Understand who you are lending to and weather the risks are mitigated in any way. Higher interest rates could mean there are more risks involved.

3

One IFISA a year

You can only contribute your annual allowance to one IFISA per tax year. You may transfer any historic ISA balance to multiple IFISAs.

4

Transfers

Existing ISA balances should only be moved via the ISA transfer process. If you simply withdraw funds or close an existing ISA, you may lose its tax-free status.

Your capital is at risk. Tax treatment is dependent on an individual's circumstances and may be subject to change in the future.

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A different ISA

Innovative Finance ISAs are very different to cash ISAs. It's important to assess the risks involved.

A new way of lending

P2P grew dramatically after the financial crisis in 2008. Many providers are relatively young without much track record.

Making a loss

You risk making a loss if the borrower doesn't repay. You should check what providers do to reduce any risks.

No FSCS cover

Unlike cash ISAs, IFISAs are not covered by the Financial Services Compensation Scheme (FSCS).

The Octopus Choice Innovative Finance ISA

The Octopus Choice ISA helps you target attractive returns by investing in loans backed by bricks and mortar.

Remember your capital is at risk: you may get back less than you put in. Investments aren't covered by the Financial Services Compensation Scheme (FSCS).

Frequently asked questions ISA

Eligibility
Transfer
Allowance

If you are over 18, are a resident of the UK and have a National Insurance Number, then you are eligible to invest in an IFISA.

Those new to Octopus Choice can set up an ISA when they create their Octopus Choice account. Or, if you're an existing user, you can do so from your dashboard.

No, the Octopus Choice IFISA is not a flexible ISA. This means that any money you withdraw from your Octopus Choice ISA will still count towards your annual ISA allowance (£20,000 for the 2018/19 tax year).

In other words, if you've invested up to your ISA limit and subsequently withdraw money from your Octopus Choice ISA, you won't be able to invest any money into it. (You can, of course, continue to invest in your regular Octopus Choice account, where there's no limit!)

Yes, you can transfer existing ISAs into an Octopus Choice ISA.

You'll first need to create an ISA account that you can transfer across to, but this should only take a few minutes (and you don't even need to put any money in it, if you'd rather fund it with an existing ISA or ISAs).

You can create an ISA account straight from your account dashboard – or, if you're not already a customer, just sign up here.

You can transfer cash ISAs and Stocks & Shares ISAs into an Octopus Choice ISA. For cash ISAs, be aware that you can't transfer them back until the next tax year, unless it's a flexible ISA.

In the case of a Stocks & shares ISA, we recommend checking your provider charges and exit fees.

Do you accept partial ISA transfers into Choice?

We accept full and partial ISA transfers here at Octopus Choice.

Your current provider needs to receive a signed transfer request from you. Sending your transfer direct to your current provider will speed up the process significantly.

Cash ISA transfers generally take between one and two weeks to complete. Stocks & shares ISAs could take up to four weeks. If you did want to check on the status of your transfer, feel free to get in touch.

Yes. We'll drop you an email as soon as we've received your funds.

The process takes between two to three weeks, we'll make sure to chase your provider and request an updated for you.

All your ISA transfers will be consolidated into your Octopus Choice ISA account. You can then continue to pay in to your Octopus Choice ISA as often as you like, bearing in mind the annual limit.

For the 2018/19 tax year, you can invest up to £20,000 in ISA investments.

You can split your ISA investments across cash, stocks & shares and innovative finance ISAs, providing the overall amount doesn’t exceed the ISA allowance. You are, however, only allowed to invest new funds into one of each type of ISA a year.

In other words, you could for example invest up to £20,000 across both a new stocks & shares ISA and a new IFISA – but can't invest in more than one of either in the same tax year.

You can fund your Octopus Choice ISA in much the same way you make regular investments into your account – by bank transfer, cheque or debit card.

You're also able to transfer funds from your current Octopus Choice account into your Octopus Choice ISA – although you should be aware that the rate you earn and the number of loans in which your money is invested is likely to change.

So long as you let us know within 30 days of making your investment that you want to withdraw funds from your ISA, then we should be able to facilitate this without it counting towards your annual ISA allowance.

If you leave it longer than 30 days, then your investment will have been declared to HMRC. This means you will be able to request a withdrawal of your funds, but it will still count towards your ISA allowance.