Smart Money: A Guide to Innovative Finance ISAs

18th November 2019

At Fluid, we offer our investors an Innovative Finance ISA. For many, this particular product will need no introduction. However, given that the product is still a fairly new one on the financial market, many people are unaware of exactly what the Innovative Finance ISA is, and how it differs from other, more mainstream ISA products.

IFISA uptake is continuing to increase, and, for those curious individuals interested in adding an IFISA to their portfolio, we’ve put together our very own guide to this potentially lucrative investment opportunity.

What is the Innovative Finance ISA?

Introduced by the Government in 2016, the Innovative Finance ISA is the most recent ISA option to be established in the UK market. Instead of containing cash or stocks and shares, an IFISA facilitates peer-to-peer loans (P2P), lent directly to borrowers and businesses who pay the loan back with its associated interest. As with other ISAs, this IFISA allows investors to take advantage of tax-free allowance, which is capped at £20,000 for 2018/19 UK tax year. Through P2P lenders, investors can see their money contributed across a wide range of sectors, such as business, energy solutions, and, as is the case with Fluid, property

What does the IFISA offer investors?

The interest rates offered by IFISAs are often higher than cash ISAs, the returns from which often fail to outpace the current 1.7% inflation rate; at Fluid, we offer a 6% rate paid quarterly. Some firms promise as much as 12% interest, but with this increased return comes increased risk, and many investors could be better off going with a more prudent rate. As with any form of investment, there is a risk with investing through IFISAs. It is extremely important that potential investors sensibly weigh up their appetite for risk, and research P2P lenders to see if the product is secured by anything – at Fluid, all of our loans are back up by real assets, such as property.

How popular is it?

The attraction of the IFISA is evident in the enormous boom that the product has seen since its inception. 2016/2017 saw only 5,000 accounts open, with a total of £36m invested; the next year saw these numbers skyrocket, with 2017/2018 boasting 31,000 accounts, and £290m invested. With the shortcomings of other ISA offerings, and the diminishing lucrativeness of the Buy-to-Let market, it is easy to see why such substantial uptake has been seen in such a short time.

What are the potential benefits of investing?

Investments through Innovative Finance ISAs could be a win-win for investors and borrowers alike. While investors could see healthy returns at a high rate, borrowers can access funding to fuel projects across the UK which could boost the economy. These types of financing models, for example in the form of bridging loans, could even help to address national problems such as the housing crisis, by aiding property financing. Investors do need to approach the opportunity with some caution, however. In an area where there will always be risk, opting for an IFISA with a sensible rate – rather than a flashy one – could pay dividends.


If an Innovative Finance ISA sounds like it could be for you, fill out our application form at, or give us a ring at 08000 884 548. As with all investments, your capital is at risk. IFISAs are not covered by the Financial Services Compensation Scheme.