The Innovative Finance ISA is a welcome addition to the tax incentives that can apply to social investments and is aimed at those people wanting to take advantage of their annual ISA allowance of £20,000 and use it for investments.
Many people have regular cash ISAs where they can get tax-free savings of £20,000 per tax year. Ethex lists a number of these and they are designed to allow you to easily withdraw money when you need it. For those who want to extend this to investments there are also stocks and shares ISAs. The £20,000 applies across all ISAs within the year so you can only utilise up to £20,000 even if you have money in a cash ISA and a stocks and shares ISA. However, you can “transfer in” previous years allowances and there is no limit to the amount you can transfer in. This can often be quite sizeable sum if you have been regularly investing your full ISA allowance every year.
However, you cannot transfer in existing investments, so those people with stocks and shares ISA’s would need to liquidate their investments first. In addition you can’t transfer out an ISA with open investments but you can have a different IFISA account per tax year.
The Innovative Finance ISA (IF ISA) is the new kid on the block. It was launched in 2016 to allow people using Peer to peer (P2P) or lending platforms to utilise the ISA scheme. The scheme was extended to cover other debt-based products such as bonds. Ethex now has several investments which are IF ISA eligible. All you need to do is chose the IF ISA option when you invest.
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Ethex has now launched its IF ISA offering. This is great news for social/positive investors as Charities and Community benefit societies can choose to have their investments qualify and investors can get a boost to their financial return. However, bonds or debt based investments won't be appropriate for all organisations and community shares/ordinary shares will still be utilised by many societies.
So how does the IF ISA process work in detail?
For eligible products, you can either invest up to your current year ISA allowance of £20,000 and simply follow the ‘Invest with IF ISA’ link that is clearly marked on the investment page of IF ISA eligible investments and place your order online.
If you'd like to transfer an existing ISA to Ethex then please contact our operations team on 01865 403304 or by emailing firstname.lastname@example.org and we will send you a transfer form.