At a glance

The Innovative Finance ISA is a new class of ISA available from 6 April 2016.

• It is offered by peer-to-peer lending platforms with the appropriate regulatory permissions.
• Interest and gains from peer-to-peer loans will benefit from ISA tax advantages.

From 1 November 2016, the range of investments that can be held in an Innovative Finance ISA is extended to include certain debentures issued by companies or charities, including those offered via crowdfunding platforms.

A number of conditions have to be met regarding the issuer, debentures, and investor:

• The debenture must be a transferable security issued by a company or charity.
• The investment must be facilitated through an electronic system by a person with the appropriate regulatory permissions.
• The investment cannot be part of a tax avoidance scheme or arrangement.
• The debenture is not made available by reason of being (in the past, present or future) an employee, director, partner, trustee or officeholder.
• The investor is not connected with the issuer.
• The debenture is not connected with any other investment held outside an ISA.

This expansion of the Innovative Finance ISA was previously announced and consulted on in 2015, with draft legislation published in August 2016 which came into force from 1 November 2016.