Your comprehensive guide to the Innovative Finance ISA

15th October 2018

With bank rates predicted to stay at a constant low and inflation on an almost constant rise, your money could be losing value in a traditional, standalone savings account. No-one likes to hear this, so if you’re keen to potentially earn a higher rate on your savings then an Innovative Finance ISA could be exactly what you are looking for*. With the popularity of some IFISAs on the rise this, now is the perfect opportunity to consider an alternative way to potentially earn a better return on your money.

What is an Innovative Finance ISA?

An Innovative Finance ISA – commonly referred to as an IFISA – is a moderately new form of an Individual Savings Account (ISA) which benefits UK customers through tax-free** and capital gains-free interest on their ISA. In 2016 the IFISA was introduced by the government, giving you the opportunity to invest up to £20,000 tax-free per year. This is not to say you can’t invest more than £20,000 – you can, this is just the allowance that is available on which any returns would be tax-free. Investing through the Fluid ISA allows you to invest a lump sum or make monthly payments into The Fluid Bond.

The funds raised from the bond by Fluid Bond are invested through Fluid Bond’s partner, Fluid Trust – a bridging loan provider only investing in asset-backed*** deals, to give you a level of peace of mind.

How are IFISAs different to traditional ISAs?

Many traditional ISAs typically offer an interest below 1%, whereas IFISAs tend to offer a much greater return and therefore a better potential return on your investment. For example, investing through the Fluid ISA into The Fluid bond comes with an attractive interest rate that customers can earn up to 6% per annum which is fixed for 3 years, receiving interest rates every quarter. Funds that you invest through an IFISA count towards your £20,000 per annum tax-free** savings allowance.

Are there any risks?

Of course, with every investment, there is always an element of risk which is reflected in the level of return the investor can expect to receive. Investing in an IFISA is much riskier than putting your money in a cash ISA. That isn’t to say it can’t be more beneficial.

So why is it riskier? Its riskier because with an IFISA that invests in a bond – such as the Fluid ISA – all of your capital is at risk and there is a chance that the bond investments could go down as well as up. One of the main risks is that an IFISA is not covered by the FSCS (the government-backed deposit insurance scheme that protects banks deposits including Cash ISAs), meaning if Fluid Bond goes into insolvency or administration your invested amount would not be covered.

However, although there are risk factors it’s not to say it isn’t potentially the better option. Fluid Bond ensures that your investment is ultimately used to make loans that are asset-backed, ensuring a certain level of security.

Benefits, tax efficiencies and allowances

Prior to the launch of IFISA in 2016, all investors were required to declare Crowdfunding income to HMRC, this was typically via a self–assessment return with the gains being taxable at the individual’s margin rates. The advantage of an IFISA, therefore, is that Crowdfunding income gets taken out of tax completely. Even more reason to invest through the Fluid ISA!

Fluid ISA

Fluid Bond are committed to ensuring that you are provided with the best possible IFISA. We are committed to delivering you an accessible, responsive and dependable service – maintaining strong communication links with all parties to ensure Fluid Bond and Fluid ISA assess applications quickly and effectively.

Want to find out more?

Now is a good time to be thinking about IFISA. An IFSA is a good way to be able to plan this year’s allowances, and more importantly, make the most of your money for the 2018/2019 tax year.

Here at Fluid Bond we are going to be here every step of the way, constantly updating blogs regarding the Bond and Innovative Finance ISAs and what we can do to help you. If there is anything you’d be interested in hearing us cover, please don’t hesitate to contact us at or get in touch via one of our social media channels.

Alternatively, if you’re ready to find out how The Fluid Bond could work for you, go and visit our main webpage for more information.

* Investment in our bond through an ISA may offer a higher rate of return, but it is likely to be harder to transfer/sell your investment than a product offering lower interest rates. Your capital is and risk and you should read the risk section fully before proceeding any further.
**Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.
*** The fact that the bond is asset-backed would not guarantee that all capital would be repaid. This also means that there is a liquidity risk and there is likely to be a delay in repaying your capital should you request it.