There are 4 categories of ISA in the UK: Cash ISA, Stocks and Shares ISA, the Lifetime ISA and the Innovative Finance ISA. The Innovative Finance ISA (IFISA) is a tax-free account allowing individuals to hold Bonds, Loan Notes, Peer to Peer (P2P) loans and Debentures.
Every UK adult is permitted to invest up to £20,000 tax-free in an ISA in 2018/19. It is possible to split this allowance across the different types of ISAs (the Lifetime ISA is subject to restrictions). But you cannot open more than one new ISA in each class in each tax year. (i.e. only ONE cash ISA and ONE Stocks and Shares ISA, ONE Lifetime ISA and ONE Innovative Finance ISA can be opened in each tax year).
The process to open a Crowdstacker IFISA is very easy. All you need are your bank account details and your National Insurance number.
You can apply for an ISA in just a few simple steps online. Just click the ‘Open an IFISA' button below or alternatively click the 'Open an Account’ button which you can find in the menu bar at the top of this web page. It takes a few minutes to apply and you can then start your tax-free Peer to Peer investment portfolio immediately.
When you start the Innovative Finance ISA application journey you will also be given the choice to download and complete a paper application which you can return by post.
The Innovative Finance ISA works in a simple and straightforward way. Basically you put your money into your Innovative Finance ISA account. You then choose business(es) to lend to from those available on the Crowdstacker platform. The business(es) pay you an agreed rate of interest throughout the term. Your investment is then repaid by the business(es) into your Innovative Finance ISA account at the end of the term.
To be eligible to subscribe to an Innovative Finance ISA an investor must:
- be aged 18 or over;
- be resident in the United Kingdom or, if not a resident, be performing duties as a Crown employee serving overseas and paid out of the public revenue of the United Kingdom (typically a serving member of the armed forces, or a diplomat), or be married to, or in a civil partnership with, such a person;
- not have subscribed to another ISA of the same type in that tax year otherwise than by way of additional permitted subscriptions, flexible ISA replacement subscriptions, defaulted cash account subscriptions to a cash ISA, and Help to Buy ISA reinstatement subscriptions; and
- not have exceeded the overall subscription limit which is £20,000 for 2018/19.
Investors can subscribe in each tax year to one of each of the following:
• Cash ISA;
• Stocks and Shares ISA; and
• Lifetime ISA; and
• Innovative Finance ISA.
Investors do not have to declare income or gains from an ISA on their tax returns, unless the ISA subscription has been made void. Capital losses in respect of ISA investments are disregarded for the purposes of capital gains tax.
It is possible to withdraw part or all of your ISA investment from the Crowdstacker Innovative Finance ISA but there are some limitations to this.
When you lend money to a business under any Crowdstacker investment, you commit to lending that money for a defined period of time – usually anything between 12 months and 3 years. During this time it is not possible to withdraw the original investment amount. However, we do offer a match bargaining system where investors looking to sell their loans can be matched with those looking to buy (this process is not guaranteed).
When interest payments have been paid into your Innovative Finance ISA Account or you have un-invested money in your account, you are free to withdraw these cash funds at any time. We require up to 8 business days to process your withdrawal request.
Strictly, all ISA applications must be made by the investor. But Crowdstacker may accept an application from someone holding a Lasting Power of Attorney (LPA) which has been registered with the Public Guardians Office and which gives the attorney the power to make the decision to open an ISA.
Crowdstacker will need to:
- see the LPA (or a certified copy of it) and retain a copy for their records in case the account is queried by HMRC auditors,
- check any restrictions on the LPA to see that it is broad enough to cover the opening of an ISA.
The overall ISA limit of £20,000 can be split between a Cash ISA, a Stocks and Shares ISA, Lifetime ISA (limit of £4,000 per annum) and an Innovative Finance ISA as the investor wishes.
You can transfer from your Cash ISAs and Stocks and Shares ISAs into your Crowdstacker Innovative Finance ISA.
If you apply online for the Innovative Finance ISA you will be offered transfer forms during the online application process which will allow you to transfer from any existing ISAs to your new Innovative Finance ISA.
If you are applying by post and had requested transfer forms, you will find these in your ISA application pack. If you do not have these forms and would like to be sent them please call us on 020 7118 7570 and we can post them to you.
Under the current terms set out by HMRC it is not possible to open more than one Innovative Finance ISA in any given tax year. This is exactly the same as the terms for the Cash IS, Stocks and Shares ISA and Lifetime ISA.
An ISA ceases on the death of the investor. Any interest or gains in respect of investments in his or her ISA that arise (which in general terms means ‘paid’) after the date of death to the date of closure are not exempt from tax.
But there is no loss of exemption on interest, dividends or gains which arise before the date of death, including any gain treated as arising as a result of the death of the investor under the rules for investments in policies of life insurance.