With the new tax year just around the corner, it is a good time to review the key reasons why you should consider taking advantage of the tax benefits available.

The Individual Savings Account (ISA) is a tax-efficient way for UK individuals to save or invest. Each tax year, UK residents can subscribe up to their annual allowance (£20,000 for 2019/20 and 2020/21) in an ISA. Earnings on these accounts are exempt from both Income Tax and Capital Gains Tax and nor do you need to declare these earnings as part of your self-assessment tax return.

There are currently four types of ISA:

Savers and investors can fund each of these per year, so long as the total capital does not exceed their annual allowance.

British Pearl offers an Innovative Finance ISA (IFISA).

Innovative Finance ISAs can hold certain qualifying loans, debt securities and cash.

There are a number of IFISA options on the market, and it is important to understand that each has a different risk profile such as consumer loans, small business loans, or property loans. Make sure you thoroughly read about the provider and their products on offer, as the risks involved will differ from manager to manager. While many platforms may offer early access, for example via a secondary market, it is important to recognise that IFISAs are not savings accounts and should be viewed as investments and not cash. We have a blog discussing different P2P business models here which may be useful.

6 things to know about the British Pearl IFISA

1. Up to 4.3% 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. Invest within the IFISA wrapper and, interest earned on your loans is tax-free. Share investments are not ISA eligible.

2. Everything is done in-house (pardon the pun)
   We source and manage all of our properties ourselves. Our expert 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. If you want to know more about how we manage the properties see here.

3. Earnings from day 1
   There is 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 is within the IFISA wrapper, it could even be reinvested tax-free: compounding your ISA interest without affecting your annual allowance.

4. 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 60%, giving Loan Investors significant equity protection should property prices falter. If you want to know more about loan-to-value see here.

5. 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 of 0.5% on successful sales). Our IFISA is flexible as well, so you can replace any capital you take out within the tax year without it affecting your annual allowance.

6. Transfers-in accepted
   British Pearl also accepts 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 charge you to exit and so it is good to check first), and relatively straightforward: so it can be a simple way to get your old ISAs performing at more competitive returns.

But what about your previous years’ ISAs?

Moving money you already have saved up in a tax-free wrapper could be a great way to take advantage of the latest ISA offers and boost your portfolio’s overall return. And the best bit? Transferring your ISAs - as opposed to withdrawing the money and reinvesting it - keeps its tax-free earning status.

So as you look around for the best deal for your allowance, why not also think about a new home for your existing ISA pot. Like British Pearl, for example: could your portfolio benefit from tax-free returns of up to 4.3% p.a.?

Give your money a home® with British Pearl

James Newbery is Investment Director at British Pearl.

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. Read our key risk statement.

For more information on ISAs generally and eligibility criteria please see the HMRC website here.

How transferring an ISA to British Pearl works