What is an innovative finance Isa, or Ifisa?
An innovative finance Isa (Ifisa) is an Isa that you can use for more complex types of investment, while getting tax-free benefits like a cash Isa or stocks and shares Isa.
These investments include crowdfunding, open ended property funds, cryptoasset Exchange Traded Notes (ETNs), and more.
It is most commonly used for peer-to-peer lending, which matches up investors with borrowers, who could be individuals, businesses, or property developers.
And because you’re cutting out a bank by investing your money through an online portal – known as peer-to-peer lenders – you tend to earn higher rates of interest than a traditional savings account. However, your money is at risk.
This guide explains how Ifisas work and whether you really need one.
How does my innovative finance Isa allowance work?
In the 2026-27 tax year, you can save up to £20,000 into Isas. This can be a mixture of cash, stocks and shares or an innovative finance Isa.
So, to use up your allowance, you could put:
- £10,000 in a cash Isa
- £5,000 in a stocks and shares Isa
- £2,500 in a innovative finance Isa
- £2,500 in a lifetime Isa.
It’s worth noting that you have a statutory right of cancellation for 14 days after opening the account.
From April 2027, any cash you hold in an innovative finance Isa, i.e. any money you have that isn’t currently invested, will be subject to a 22% tax on any interest earned.
How can I transfer into a innovative finance Isa?
When it comes to transferring your Isa savings to an Innovative finance Isas, the rules are similar to those for transfers to cash or stocks and shares Isas.
You can transfer any money that’s already within a cash Isa or stocks and shares Isa to an innovative finance Isa offered by a peer-to-peer provider.
The process will work like this:
- To transfer your Isa, you should complete a transfer form with the innovative finance Isa provider you want to switch to;
- Don’t withdraw your money out of your other Isas to transfer, as it could impact on your current Isa allowance;
- Transfers take place in cash – so if you hold stocks and shares Isas, all of your investments would be sold and the cash would be used to invest;
- Transfers to innovative finance Isas should take no more than 30 working days.
Can I transfer existing peer-to-peer loans to an Ifisa?
As it stands, you will not be able to simply transfer your existing peer-to-peer investments into an innovative finance Isa, if the site you invest with launches one.
Through a quirk in regulation, you would have to sell them – incurring any early exit charges that apply – and then make those loans again at whatever new rate applies at the time.
Is peer-to-peer investing right for you?
Peer-to-peer lending involves considerable risks, and several platforms have collapsed in recent years.
Under marketing restriction rules, peer-to-peer platforms may only communicate ‘direct-offer financial promotions’ to retail clients that are classified as either:
- certified high-net worth investors
- certified sophisticated investors
- self-certified sophisticated investors
- investors who are certified as ‘restricted investors’
However, peer-to-peer investments are still high-risk products, with limited protections should the borrower default. Some platforms offer contingency funds, but these don’t guarantee to repay all investors.
Unlike stocks and shares investment platforms, peer-to-peer platforms are not protected by the Financial Services Compensation Scheme should they collapse.
And unlike savings accounts, returns are not guaranteed, and past performance does not serve as a reliable guide to future performance. You could face waits of several months to withdraw your money.
- Find out more: best investment platforms
Crypto exchange-traded notes (ETNs)
As of 6 April 2026, Crypto ETNs – funds that invest in cryptocurrencies – can be held in Ifisas.
When you invest in an ETN, you don’t own the underlying assets it tracks, like you would with a share. Instead, it works more like a bond that is issued by a financial organisation which pays you a return that mirrors the index. If the organisation behind the ETN goes bust, you would lose some or all of your investment.
Crypto ETNs are a very high risk investment, so you should only invest if you have a good understanding of how crypto works and if losing the money you invest wouldn’t be a problem for you.
- Find out more: what is an ETF?
How to assess the risks of Ifisas
There are some important things to consider when choosing an Ifisa provider, including:
- The platform’s track record, as several have collapsed or been bought out in recent years
- How spread out your investments are across borrowers to achieve a diversified portfolio
- What protections are offered by the platform should it be in trouble or go bust
- Whether or not you’ll be able to transfer your Ifisa if needed
- How you can access your money, and any charges it could impose if you want to withdraw cash early.
If you can, seek independent financial advice to help you identify your risk profile and long term goals.
- Find out more: how to find a financial adviser