The start of March signals the beginning of the so-called "ISA season". So, with that in mind John Goodall, CEO and co-founder of Landbay, offers five reasons why savers should consider the Innovative Finance ISA this ISA season.
Savers and investors are running out of options for an inflation-beating return. Unless they are prepared to place their funds in more risky investments, they have to be smarter than ever when it comes to their finances.
One option rising in popularity is the Innovative Finance ISA (IFISA) – a new, but now well established tax free investment offering allowing investors to make peer-to-peer investments within an attractive tax-free ISA wrapper.
1. Tax-free – The IFISA allows peer-to-peer investments to be made within a tax-free wrapper. This type of investment sits alongside the established Cash and Stocks & Shares ISA and acts to protect investors from both income tax and capital gains tax liabilities. Any interest is totally free of income tax, while any trading of loans or loan parts within the wrapper are also free from capital gains tax.
2. High interest rates – Getting a real buck for your savings requires more than the current lacklustre interest rates on offer in most of the mainstream bank’s saving accounts. Peer-to-peer interest rates can be anything between around 2% and 8%, with varying risk levels to suit.
3. An alternative way of investing – The IFISA allows investors to put their money behind something that they may not have the capital to do outright. For example, the underlying fundamentals of the property market are supportive of strong returns, but the sector is hard to access for those who can’t afford to buy a property.
4. Access to a variety of asset classes – You have the freedom to choose who you want to lend to. Whether it be to SMEs or UK landlords, the peer-to-peer mechanism allows investors to put their assets in a variety of asset classes, with risk levels depending on the asset classes you invest in.
5. Regular income – A regular income provides investors with an expected and steady stream of income, generated from a robust asset class.