The IF-ISA (Innovative Finance Individual Savings Account) is a new category of ISA, which launched in 2016.
UK crowdfunding experts Crowd for Angels has announced that a 2% Annual Equivalent Rate (AER) is to be calculated on any IF-ISA balances from the date of opening until 15 June 2017.
The interest payment (which does not qualify for a tax exempt status under ISA rules) will be paid into a client’s IF-ISA as a single payment within three working days of the June deadline.
The IF-ISA joins the better-known cash and stocks and shares ISAs, enabling clients to invest their money into crowdfunded debt securities and earn tax free returns.
Crowd for Angels has designed its ‘Crowd Bonds’ for this purpose.
Crowd Bonds are debt securities which allow investors to lend money to UK companies. They are secured against the borrowing company’s assets and provide a regular flow of income which can help in your financial planning. Because Crowd Bonds can be included within in the IF-ISA “wrapper”, investors can also look forward to tax free returns.
Crowd for Angels Crowd Bonds are crowdfunded bonds that can be invested through an IF-ISA, which can be set up alongside cash and stocks and shares ISAs to get tax free returns.
All Crowd for Angels’ Crowd Bonds are secure and can pay up to 9% per annum and Crowd for Angels’ IF-ISA enables investors to select and lend money on secured terms directly to UK companies seeking funds to expand, diversify or develop their businesses.
Companies then access the funds they need, while investors have the potential to earn higher rates of interest than they could on bank deposits or cash ISAs – all without paying tax.
Investing in debt pitches/Crowd Bonds through Crowd for Angels (UK) Limited involves lending to companies – and therefore capital is at risk and interest payments are not guaranteed if the borrower defaults. Investments made in companies listed on the Crowd for Angels platform are not covered by the Financial Services Compensation Scheme (FSCS).
Clients can invest part or all their ISA allowance into an IF-ISA each year and can also transfer in any existing ISA funds from previous years.
The Crowd for Angels’ ISA is free to open, available online 24/7 and offering a choice of UK companies to lend to. It takes less than five minutes to open.
Crowd for Angels CEO, Tony De Nazareth, comments: “With interest rates on Cash ISAs currently at an all-time low, we expect to see high demand for our Crowd Bonds. Investors willing to take on extra risk by lending to companies have the opportunity of making tax free returns of up to 9% per annum on our asset backed bonds, which compares to an average interest rate of just 0.64% on a Cash ISA.”
Tax treatment of ISAs is subject to change and dependent on individual circumstances.