Introduced three years ago, the Innovative Finance ISA (IFISA) allows savers and investors to receive tax-free earnings on their regulated peer-to-peer and alternative finance investments. Nestled between the surety yet low-yielding cash and the volatility of the stock market, IFISAs offer a third option when it comes to where to put your money this ISA season.
There are a number of IFISA options on the market, and it's important to note that each will be backed by its own asset class, such as consumer loans, small business loans, or property. So make sure to thoroughly read about the provider and their products on offer, as the risks involved will differ from company to company. And while many platforms do have an early access mechanism, it's not a cash-based account and should be viewed as a longer-term investment.
British Pearl is a property investment platform. Through it, people can invest in shares or ISA-eligible loans in properties across the country, starting from £100, with an early access option via the Resale Market (subject to demand and price). As we are authorised and regulated by the Financial Conduct Authority (FCA), and are an ISA Manager, we can offer an IFISA option for their loan investments.
Ali Celiker, CEO at British Pearl, says: "We started this business to open up property-backed investing to more people looking for a better return on their savings. With cash still at near-historic lows and a volatile market, people want that balance between an attractive, inflation-beating return and a trusted asset that can provide a certain level of capital security.
But property-backed investing - traditionally - is expensive and time-consuming. We saw an opportunity to change that. Through our platform, investors can start with just £100 and choose which of our carefully selected and managed property investments to invest in, all of which are immediately income-producing.
Our IFISA allows people to be tax efficient with their British Pearl loan investments. This gives them another lever to pull when it comes to their ISA portfolio's overall return."
Here are 6 things to know about the British Pearl IFISA:
Up to 4.40% tax-free earnings on property-backed investments Browse through British Pearl's list of attractive UK properties available for investment, and decide where you want to put your money. And within the IFISA wrapper, loan investment earnings on your annual allowance (£20,000 for tax years 2018/19 and 2019/20) are tax-free. Share investments are not ISA eligible.
Everything is done in-house (pardon the pun) We source and manage all of our properties ourselves. Our expert property, investment, and property management teams have decades of experience between them, so you can trust that we've done all of our due diligence before you invest.
Earnings from Day 1 There's no waiting around to see interest accruing on your IFISA loan investment. We ensure our investment properties are income-producing before they go on the website, so you start seeing income straight away. And that interest is then paid to you on a monthly basis, where you can decide what to do with it. As it's within the IFISA wrapper, it could even be reinvested tax-free: compounding your ISA interest.
Loans secured against bricks and mortar Our ISA-eligible loan investments are secured with a first charge. To date, our properties have been bought with an average loan-to-value of 59%, giving Loan Investors significant equity protection should property prices falter.
Flexibility You have control over your investment. You choose which properties to invest in, how much you want to invest, and what to do with your interest. And if you need to access your money early, you can list your loans for other investors on the platform to bid on (subject to demand and for a small fee on successful bids). The IFISA is flexible as well, so you can put back any capital you take out within the tax year.
Transfers-in accepted British Pearl also accept transfers of existing or previous years' ISAs from other providers. Transferring ISAs is usually free (we won't charge you for transfers, but your current provider might so it's good to check first), and relatively straightforward: so it can be a simple way to get your old ISAs performing at more competitive returns.
When you invest with British Pearl, your capital is at risk and invested sums are not covered by the Financial Services Compensation Scheme (FSCS). Forecasts are not guarantees and performance may vary. Tax treatment depends on individual circumstances and may change. Resale Market trading is subject to demand and price. Read our key risk statement.