An innovative finance ISA (IFISA) is the ISA for lending rather than saving or investing in shares. The return is tax-free like any ISA’s, but the risks are different from a cash ISA’s, and the protection is much weaker.
What it can hold
- Peer-to-peer loans: you lend money to individuals or businesses through an authorised platform, for an agreed interest rate.
- Crowdfunding debentures: investing in a business by buying its debt.
- Funds that can’t be held in a stocks and shares ISA because of their notice or redemption period.
- Cryptoasset exchange traded notes: from 6 April 2026 these can’t go into a stocks and shares ISA (unless already held there before that date), and have to be held in an innovative finance ISA instead.
Long-term asset funds went the other way: from 6 April 2026 they can’t be held in an IFISA unless already held there, and belong in a stocks and shares ISA. You can’t move investments you already hold outside an ISA into an innovative finance ISA.
The risks
The main risk with peer-to-peer lending is that borrowers miss repayments, which can mean less interest than you expected or losing some of the money you lent. Your money may also be tied up until the loans are repaid: check how and when you can get it back before you invest.
Protection
An IFISA isn’t a deposit, so the FSCS deposit protection that covers a cash ISA doesn’t apply. The FSCS says its protection for crowdfunding and peer-to-peer investments is very limited: it can’t cover poor investment performance, and may be able to help only in cases such as unsuitable advice to invest. Many platforms say “no FSCS protection” in their terms. Check the platform is authorised by the FCA on the Financial Services Register.
Transfers
Cash in an IFISA can always be transferred to another ISA. Whether you can move the loans or other investments depends on the account’s terms. Cash and stocks and shares ISAs can be transferred into an IFISA with no restriction: see ISA transfers.
From 6 April 2027
Interest paid on cash held inside a stocks and shares or innovative finance ISA has a flat 22% charge. Transfers from stocks and shares ISAs and innovative finance ISAs into cash ISAs are restricted. See the cash ISA limit.
Related guides
- ISAs guide: the ISA types, the allowance and the main choices in one place
- Cash or stocks and shares ISA: the lower-risk choices
- FSCS protection: deposit and investment protection
- ISA allowance: how the allowance is shared