The Kuflink Peer to Peer Investor Blog

Publish at: 2020-02-12 17:23:11

IF-ISAs: Frequently Asked Questions

The main types of Individual Savings Account (ISA) are Cash, Stocks and Shares, Lifetime, Help to Buy and Innovative Finance ISA.

What is an Innovative Finance ISA?

Innovative Finance ISAs (IF-ISAs) are investments that allow consumers to lend and earn tax-free interest through a Peer to Peer lending platform. Innovative Finance ISAs pair up willing lenders (or investors) with individual and business borrowers through an easy-to-use online platform.

With an IFISA, you are loaning your money directly to borrowers across a range of project types in different industries. Each IF-ISA providers’ offering will differ so ensure you read their product terms before investing.

Kuflink’s IF-ISA is available to new investors or those wishing to transfer in funds, with the option to invest up to £20,000 per annum tax-free. Choose from 1, 3 or 5-year terms, with interest of up to 7% per annum*. Kuflink's IF-ISA pays interest annually and does not charge platform or investment fees.

* Capital is at risk and Kuflink is not protected by the FSCS. Past returns should not be used as a guide to future performance. Securing investments against UK property does not guarantee that your investments will be repaid and returns may be delayed. Tax rules apply to IF ISAs and SIPPs and may be subject to change. Kuflink does not offer any financial or tax advice in relation to the investment opportunities that it promotes.

How many IF-ISAs can I have?

You can have multiple ISAs, but you are only allowed to open one new IF-ISA with a single provider per tax year. As of the 2019-20 tax year, you are allowed to invest up to £20,000 into an ISA, collectively accounting for Cash, Stocks & Shares, Lifetime, Help to Buy** and Innovative Finance ISAs.

**The Help to Buy ISA closed to new accounts at midnight on 30 November 2019

Can I carry my ISA allowance forward?

No. The annual allowance of £20,000 runs from 6 April one year to midnight on 5 April the following year, meaning that if you don’t use your annual allowance within that period, it will be lost.

What if I exceed my ISA allowance?

If you have accidentally exceeded your ISA allowance or opened an account you are not entitled to; you should not attempt to put your mistake right yourself but report it to HMRC by calling 0300 200 3300.  They will assess your situation and tell you exactly what to do next.

Should you be unaware of your error, HMRC will also check your contributions and accounts at the end of each tax year.  If they find that you have made a mistake, they will contact you and explain the process of how to “repair” your ISA step by step.  Please note that any investments that were made in excess of your allowance will not be eligible for tax exemption.

Can I transfer my IF-ISA?

Yes, you can transfer IF-ISAs. Previous years subscriptions don’t count towards your annual ISA allowance but current year subscriptions must be transferred in whole and will count towards your ISA allowance.

Can I switch my IF-ISA mid-year?

Yes. You can switch during the year but be aware that current years subscriptions must be transferred in whole and will count towards your ISA allowance. Previous years subscriptions will not count towards your annual ISA allowance.

Can I withdraw ISA money?

The point at which you can withdraw funds from an ISA depends on the type of ISA you have, so you will need to check the terms and conditions. Some accounts offer instant access. However, with the Kuflink IF-ISA, you will not be able to withdraw funds early, you will need to wait until the end of your chosen term.

What happens to my IF-ISA if I die?

If you are married, you can leave your ISAs to your spouse or civil partner and they may receive an Additional Permitted Subscription allowance equal to the amount held in your ISA accounts. For example, if you leave £10,000 in ISAs to your spouse, their allowance will increase from the normal £20,000 to £30,000 to encompass the inherited funds. 

What happens to my IF-ISA if I move abroad?

If you are a non-UK resident, you will only be able to open an IF-ISA if you or your spouse perform duties of a Crown employee, such as being a member of the UK armed forces, a civil servant or a diplomat. These exceptions only apply if the duties are treated as being performed in the UK.

While it is possible to retain access to existing ISAs when you live in another country, you will be unable to open new accounts or make contributions to existing ISAs.

If you’d like to talk to our Investor Relations team, contact us here, and we’ll be happy to help.

Kuflink provides blogs for your general information only.  Blogs do not constitute advice and should not be relied upon by you for making investment decisions. Products and services referred to will not be suitable for all investors and appropriate independent financial advice should always be sought where necessary.

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