To get the best lending results, compare all P2P lending and IFISA providers that have gone through 4thWay’s rigorous assessments.

The Peer-To-Peer IFISA Guide

Two great changes for IFISAs starting on 6th April 2024 have had a cascade of effects throughout this guide, so there are lots of updates. Those changes are:

You can now make new contributions into as many IFISAs as you want, at any time.
The last of the restrictions on partial transfers of ISA funds have been removed, so that you can now do so at any time without fear of breaching ISA rules.

This page has already been updated to reflect rules taking effect from 6th April 2024. If you're looking for the rules regarding any actions you take with IFISAs leading up to that date, read this instead.

We have nagged the taxman's notoriously tight-lipped officials, and chased down accountants, IFISA providers and even 4thWay's own skilled experts to give you answers to all your IFISA questions, as well questions you never thought to ask. Here goes:

What is an IFISA?

An IFISA allows you to lend up to £20,000 per tax year (which always starts on 6th April) to individuals, businesses or to property owners, completely tax free.

For the most part, the lending available to you is peer-to-peer lending, which means you lend directly to borrowers, and not to a middle company that then lends on to those borrowers. This reduces risk by making it more likely those risks will stay spread out.

What do I really need to know about IFISAs?

The £20,000 annual contribution allowance is shared between all the following types of ISA: IFISAs, cash ISAs, lifetime ISAs, and stocks and shares ISAs. Married couples and civil partners open separate accounts to earn their allowances.
Most IFISA providers allow you to transfer into your IFISA as much money as you want from other ISAs, including cash and share ISAs, or other IFISAs, and you can also transfer out the other way.
You may open and use as many IFISAs as you want, so long as you keep your overall new contributions within a tax year to £20,000 or less.
To initiate transfers, don't withdraw your cash from your ISA or you could lose your IFISA allowance! Instead, you complete a form with the IFISA provider that you are transferring to, and it will initiate the transfer on your behalf.
Almost all P2P lending sites don't charge you extra for wrapping up your P2P loans in an IFISA wrapper; the costs are the same.
Most people can lend tax free outside an IFISA in ordinary P2P lending accounts anyway.

The £20,000 limit is subject to change by the government, but it doesn't change often. It's the limit until at least the 5th April, 2025. It will either stay the same or rise after that point; there is no political will to reduce the limit.

That's a brief summary. Now we're going to list the available IFISAs for you and then tell you precisely how these IFISAs work, and what the full benefits, risks and costs are.

Where can I compare IFISAs?

You can compare peer-to-peer lending IFISAs, including the risks and features, and drill down into lots of details, using our IFISA comparison service.

This service is full of all IFISAs for which we have been provided enough information about risks, and 4thWay's website users like yourselves ensure the listings are impartial.

What IFISAs are available right now?

The following table lists all the P2P lending sites that already offer Innovative Finance Individual Savings Accounts. (Now you know why we just call them IFISAs.)

Some IFISAs are not peer-to-peer lending and contain an extra risk of your money being diverted to pay the IFISA provider's own debts, so those are excluded from this list.

IFISA provider	In 4thWay comparison table (because enough info on the risks is provided**)
Abundance	No
Housemartin*	Yes
CapitalRise*	Yes
CapitalStackers*	Yes
CARLTON Bonds	No
Crowd2Fund	Yes
Crowd for Angels	No
CrowdProperty	Yes
Crowdstacker	No
Downing Crowd	Yes
easyMoney	No
Elfin Market	No
Folk2Folk (see table footnote)	Yes
Fund Ourselves (previously Welendus)	No
Guarantor My Loan	No
HNW Lending (see table footnote)	Yes
Invest & Fund*	Yes
JustUs (previously eMoneyUnion)	No
Kuflink*	Yes
LandlordInvest	No
Lendwise*	Yes
Loanpad*	Yes
Money&Co.	No
Proplend*	Yes
Rebuildingsociety	Yes
Relendex	Yes
ShareCredit	No
Shojin	No
Simple Crowdfunding	No
Sourced Capital	Yes
Triodos Bank	No
Unbolted	No

Note that HNW Lending requires you lend at least £10,000 per individual loan, so it's for wealthy people only. If you put £15,000 into your IFISA, you may lend as little as £5,000 per loan. You need to sign up and then contact HNW Lending to open an IFISA.

Folk2Folk has a minimum lending amount of £20,000 per loan.

What are the benefits of lending through an IFISA?

The biggest benefit of an Innovative Finance ISA is that the lending interest you earn is always tax free. It remains tax free regardless of how much your pot of money grows over the years.

Bear in mind that, outside of an IFISA, most people won't pay tax anyway.

Basic-rate taxpayers have a £1,000 annual Savings Allowance on interest that they earn through peer-to-peer lending and savings accounts combined. So you'll usually need to lend well over £10,000 before you might start paying any income tax.

Higher-rate payers have a £500 allowance each.

This is particularly useful since each individual is only allowed to open one IFISA per year, but it is sensible to spread your money across several P2P sites early on.

You can read more about your personal allowances in our tax guide: How Is Peer-to-Peer Lending Taxed?

What other benefits are there of using an IFISA?

IFISAs also enable you to avoid being taxed on any “capital gains” you make.

Capital gains taxes aren't so common in peer-to-peer, but they can happen.

Another benefit of IFISAs is that you're saved from having to report your peer-to-peer earnings to the taxman. You don't have to declare it anywhere.

You don’t need to declare any ISA interest, income or capital gains to HM Revenue & Customs. When lending outside of an IFISA, you may have to do so.

How many IFISAs are you allowed?

A new rule is that you can now use as many IFISAs as you want, as the last of the restrictions on that have been removed!

You don't have to open new IFISAs with the same P2P lending site each year; just use the one you've already opened.

What are the IFISA limits?

Every adult can put in up to £20,000 in IFISAs this tax year.

The annual allowance is shared between all your ISAs, so if you also contribute to cash ISAs and stocks and shares ISAs, you have to decide how you'll split this year's ISA limit.

It doesn't matter how much this money grows after that, even if it grows to £100,000 or more. The total amount you can earn is uncapped and untaxed, and you may keep your IFISAs for life, if you want.

It's the amount of money you deposit into the IFISA in the tax year that counts, even if you're unable to get the money out on loan before the new tax year starts.

Transfers from other ISAs do not count towards this limit for the tax year, i.e. the limit is for completely new cash.

What are the IFISA allowances for married couples?

Married couples and civil partners can each open accounts, doubling the combined annual allowance.

What is the deadline for opening an IFISA?

The deadline for getting an IFISA open for a tax year – and not losing your tax-saving allowance for that year – is the 5th April, but some IFISA providers state that you have to apply earlier to meet their own deadlines.

Often this is five days in advance, but perhaps you should apply to open your IFISA weeks before the 5th April to be on the safe side.

When are you allowed to transfer between IFISAs?

You are free to transfer cash between all your cash ISAs, shares ISAs and IFISAs at any time, as often as you want.

The same goes for partial transfers, if you're looking to reallocate some of your funds but not all of them.

What's new from April 2024 is that you can even split new contributions you've made into an ISA, by transferring them into more than one other ISA, and even keeping some of the new contributions where they are, if you want.

(Previously, you could only split and transfer existing funds that you had from prior tax years, i.e. new contributions could not be split between ISAs.)

That said, there are still a few rules…

What are the IFISA transfer rules?

To transfer between any ISAs, so that you don't lose your tax-saving benefits, don't withdraw your money first (although read about “flexible ISAs” below). Instead, complete a transfer form provided by the IFISA provider you want to move to.

You will not be able to transfer your loans into our out of an IFISA; you will only be able to transfer cash.

Each provider has its own rules on whether you're allowed to partially transfer in some existing holdings from another provider. It also has its own rules as to whether you can partially transfer out some of your holdings.

You are, however, always allowed to transfer out your entire pot, provided it's in cash.

Transfers between ISAs don't count towards your annual, new contribution limit.

Can I transfer loan parts out of my IFISA that I'm unable to sell?

To transfer your existing loans, you need to sell them early or wait for them to be repaid by the borrower.

However, if you're unable to sell some loan parts when you transfer to another IFISA, you won't be able to transfer those loan parts. You'll have to wait.

What are the costs of transferring funds into or out of IFISAs?

Each provider has its own charges for transferring ISA funds in or out. The good news is that the vast majority of P2P lending IFISA providers don't charge for any transfer action.

What can I do if my IFISA transfer is delayed?

IFISA transfers are supposed to be completed within 30 days.

If it takes longer and you're not happy with the explanation, you can complain to the powerful Financial Ombudsman Service, which can force the transferring company to compensate you.

How do I do an IFISA transfer from or to stocks and shares ISAs?

You must sell any investments in your stocks and shares ISA before you can transfer to an IFISA, with the transfer being in cash. Use the new provider's transfer form and don't simply withdraw the cash from the shares ISA!

Can I move my money from regular P2P lending accounts to IFISAs?

You have to sell your existing P2P loans, changing them into cash, before you then pay into the IFISA. So you can't just transfer your existing P2P loans into an Innovative Finance ISA.

That applies even if you're using the same provider for both accounts.

Can I offset losses in my IFISAs against gains in P2P lending accounts?

No, you can't, for tax purposes, offset losses in your IFISA against gains made in your regular P2P lending accounts.

How do IFISAs compare to ordinary peer-to-peer lending accounts?

Most of this has already been covered in the different sections above, but this table gives you a quick and easy comparison of the key differences between IFISAs and normal peer-to-peer lending accounts:

IFISA	Ordinary P2P lending account
Your gains are always tax free.	At least the first £1,000 of interest earned each tax year by basic-rate taxpayers (in all lending accounts, bank accounts and savings accounts combined) is tax free. You probably have to lend well over £10,000 before you can expect to earn that much interest. For higher-rate payers, the tax-free interest is capped at £500. Additional rate payers have no tax-free allowance and non taxpayers pay no tax anyway.
You can contribute a maximum of £20,000 of new money into one IFISA per tax year. This limit is split between all the cash ISAs, share ISAs, LISAs and IFISAs you open this tax year. You can also transfer in money from other cash and share ISAs, as well as IFISAs.	There are no legal caps regarding the amount you can lend in ordinary P2P lending accounts.
IFISAs have a fair bit of paperwork and procedure to open or to move money around with.	Ordinary lending accounts are relatively less time-intensive to open and operate.
IFISAs are automatically tax-free and you don't ever need to report on your gains to the taxman.	For ordinary lending accounts, you might sometimes have to report taxes to the taxman or share other information, such as how interest and taxes are split when you have any joint accounts with your spouse or civil partner.
Some IFISAs are not peer-to-peer lending (which at 4thWay we define as direct lending between the end borrower and the lender, or legal means that limit the risks in the same way). Non-direct – non P2P – lending typically comes with greater risk if the IFISA provider fails. Non-P2P IFISAs are not listed on 4thWay.	Peer-to-peer lending is always peer-to-peer lending. (4thWay's definition of P2P lending is broader than most, as we base it on actual, reduced underlying risks to lenders, rather than on technicalities.)

Do I have to pay inheritance tax on IFISA money?

You don't usually have to pay inheritance tax on pensions you inherit. Alas, this is not the case with IFISAs – like all ISAs – although allowances mean most people still won't pay inheritance tax.

On your death, the ISA wrapper falls away and any income or capital gains made on that wealth is now subject to tax.

Your spouse will be allowed a one-off increase in their ISA limits, so that they can transfer your ISA wealth into ISAs of their own.

If inheritance is going to a person or to people other than your spouse, they will pay inheritance tax on amounts above the inheritance-tax threshold.

Inheritance tax affects those who have more than £325,000 in wealth that isn't being transferred to your spouse. Married couples can have double the allowance.

When adding on additional allowances for passing on your own home, it can ultimately reach £500,000 tax free, or £1 million for married couples.

How do I withdraw money from an IFISA?

You can withdraw money from your IFISA at any time, subject to the normal rules each peer-to-peer lending website has about selling loans and exiting early.

If you withdraw money in the same year you put it in, you will usually lose that part of your ISA allowance for the year…

What is a flexible IFISA?

However, your IFISA provider will tell you if it's a “flexible” ISA. This means that you can withdraw cash from your IFISA and then replace it in the same tax year.

Replacing that amount won't count towards your annual ISA allowance. If you don't replace it within the same tax year, i.e. between 6th April one year and 5th April the next, you will lose that part of your allowance for that year.

However, if you withdraw your new contributions from a flexible ISA and then open another new ISA the same year and pay it into that, you will still lose your ISA allowance on the amount you withdrew.

It's a little odd that you will still have to put withdrawn cash back into the same ISA for it to count towards the same year's ISA limit, considering you're now (as of April 2024) allowed to put new contributions into as many ISAs as you want But HMRC has confirmed to 4thWay that this rule remains in place.

For non-flexible ISAs, if you put in £10,000, then withdraw £5,000, you can only contribute an extra £10,000 in the same tax year. In other words, the withdrawn money still counts towards your total limit for the tax year.

Do IFISAs cost extra?

Most P2P lending platforms don't charge lenders extra for buying, selling and holding loans through your Innovative Finance ISA. However, some will charge you for transferring out.

You'll be able to lend as normal, in the same way as you have been outside of the ISA.

The rare exceptions that charge extra take between 0.5% and 1.5% more for IFISA lending.

What is the minimum I can lend through an IFISA?

Most P2P lending sites are using the same minimum lending amounts for their IFISA products as they do for their other lending accounts. This is typically between £1 and £100, although £500 is also fairly common, although a minimum of £1,000, £5,000 and even £10,000 happens sometimes.

What are the risks of using IFISAs?

The risks of using IFISAs for your P2P lending are fairly small:

You don't know if the costs will change after you move your money in. (You have a right to leave without exit charges in that case, provided you let the ISA provider know swiftly. If they try to charge you, get the powerful Financial Ombudsman Service to put it right for you.)
Laws and taxes regarding ISAs might change out of your favour. However, since you can get your money out of ISAs relatively easily, you might still have a chance to pull out before a negative change takes effect.

The usual risks of P2P lending also apply. For more on that, read Is Peer-to-Peer Lending Safe For Lenders? and The 13 Key Peer-To-Peer Lending Risks.

Where can I open an IFISA?

Most peer-to-peer lending sites are providing Innovative Finance ISAs directly to you from their own websites.

You will be able to see all of the IFISAs in the list of IFISAs near the top of this guide and we link to them in our comparison tables too.

Can I open an IFISA if I live overseas?

You can only open an IFISA if you are a UK resident.

Also, you can only put new money into existing ISAs if you are a UK resident.

This was part nine of our ten-page P2P lending guide

Read part eight: How Is Peer-to-Peer Lending Taxed?

Read part ten: How One Lender Is Losing Money – A Lesson In P2P Lending Diversification.

See the contents of the whole 10-part guide.

Switching IFISAs When Lending Is Too Slow.