What IF…Your investment could be tax free?

In July 2015, George Osborne announced the Innovative Finance ISA – a new kind of ISA, which will make it possible to invest through peer-to-peer platforms within a special tax-free wrapper.

This is fantastic news for anyone who wants to invest tax-free, and is one of the most significant changes to the ISA in more than a decade.

Before a peer-to-peer platform can offer its own ISA, it must be fully authorised the Financial Conduct Authority (FCA). RateSetter are in advanced stages of obtaining full authorisation - we cannot confirm a date yet but we can confirm it is progressing well.

The best way to stay up to date and ensure you are first to hear about the launch is to sign up to our IF ISA email updates.

How do I set up an IFISA?

Sign up below for more information and we’ll keep you updated, so that you’re among the first to know when a RateSetter ISA becomes available. Don't worry, we will not share your email with any third parties or send you any unrelated emails.


What does Tax-free mean?
“Tax-free” means that the interest paid will be free from UK Income Tax. The tax advantages depend on your individual circumstances and the tax treatment of your ISA may change in the future, but for most people, it means that you will be able to earn interest from peer-to-peer investments, without paying tax.

What is the Innovative Finance ISA?

The Innovative Finance ISA makes it possible to invest through peer-to-peer platforms such as RateSetter, tax-free. Currently, if you want to invest using your tax-free ISA wrapper, you’re restricted to two options:

  • Put your money in cash accounts, which benefit from FSCS protection and generally pay a low rate of interest. One year cash ISAs pay an average of 1.04%, as of June 2016 (source: Bank of England data accessed on 3 August 2016).
  • Invest in stocks, shares and funds, which are risky and volatile, but have the potential for higher returns.

When the IFISA launches, you’ll be able to invest in a new asset class: peer-to-peer lending. Peer-to-peer lending is riskier than FSCS-backed cash accounts, and capital is at risk. However, with that risk comes higher returns – RateSetter’s products currently pay annualised rates of between 2.7% and 4.5% depending on how long you’d like to invest for.

Our Provision Fund also means that to date, no individual investor has lost a penny. Past performance is not a guarantee of the future. However, it’s a track record we go out of our way to maintain.

How is the IFISA expected to work?

The current ISA limit of £15,240 per year will apply, and investors will be able to transfer in money from other ISAs that they hold elsewhere.

You’ll also be able to split your allowance between a Cash ISA, a Stocks and Shares ISA, and an Innovative Finance ISA as you wish. For example you might wish to put £5,000 in cash, £5,000 in stocks and shares and £5,240 in peer-to-peer investments, or put all of your allowance in just one of these products.

The Government has also announced a new “Personal Savings Allowance” (PSA) that means that every basic rate taxpayer can earn £1,000 per year in interest without paying tax on it (£500 for higher rate taxpayers). You can find out more about the PSA on HM Treasury.

Again, tax-free means that the interest paid will be free from UK Income Tax. The tax advantages depend on your individual circumstances and this tax treatment may change in the future.

If you have further questions, please read our Frequently Asked Questions

How do I set up an IFISA?

Sign up below for more information and we’ll keep you updated, so that you’re among the first to know when a RateSetter ISA becomes available. Don't worry, we will not share your email with any third parties or send you any unrelated emails.


Read our latest blog posts:

By Luke O'Mahony
April 4, 2016

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Last year, the Government announced that from 6 April 2016 it would be possible to include marketplace lending in a tax-free wrapper via an Innovative Finance ISA (IF ISA).

By Luke O'Mahony
February 23, 2016

How easy is it to avoid tax?

It is said that there are two certainties in life: death and taxes. While you can’t dodge the reaper forever, it is possible to reduce your tax bill substantially.