← Back to Investment Education

Alternative Investment Platforms

IFISA & P2P Lending: High-risk, tax-free alternatives

Higher Risk Investment - Read Carefully

  • •NOT FSCS Protected: Unlike Cash ISAs, IFISA investments are NOT covered by the Financial Services Compensation Scheme. If a borrower defaults or platform fails, you could lose your entire investment.
  • •Illiquid: Your money is typically locked in for months or years. Early withdrawal may not be possible or could result in losses.
  • •Default Risk: Borrowers may default on loans. Even with property security, recovery can take time and may not cover your full investment.
  • •Platform Risk: If the P2P platform fails, accessing your investments becomes complicated even if loans are performing.

What is an Innovative Finance ISA (IFISA)?

An Innovative Finance ISA (IFISA) is a type of Individual Savings Account introduced in 2016 that allows you to earn tax-free interest from peer-to-peer (P2P) lending and crowdfunding investments.

Like other ISAs, you can invest up to £20,000 per tax year across all your ISAs combined, and any returns are completely tax-free (no income tax on interest earned).

How IFISA Works

1

You Invest

You deposit money into an IFISA account with an FCA-regulated P2P platform.

2

Platform Lends

The platform lends your money to borrowers (individuals, businesses, or property developers).

3

Borrowers Repay

Borrowers repay the loan with interest over time (monthly or at maturity).

4

You Earn Tax-Free

You receive interest payments completely tax-free within your IFISA wrapper.

IFISA vs Other ISAs: Risk & Return Comparison

ISA TypeTypical ReturnRisk LevelFSCS ProtectedLiquidity
Cash ISA3-5%Very Low
(Deposits)
Instant
Stocks & Shares ISA7-10%Medium
(Platform failure)
1-3 days
IFISA (P2P)5-10%High
(No protection)
Months/Years

FSCS Protection Note: Cash ISA deposits are protected up to £85,000 per institution. Stocks & Shares ISA investments are protected up to £85,000 if the platform/broker fails (but NOT against market losses). IFISA has NO FSCS protection at all.

FCA-Regulated IFISA Platforms in the UK

All Platforms Listed Are FCA-Regulated

To offer an IFISA, platforms must be authorised by the Financial Conduct Authority (FCA) and granted ISA Manager status by HMRC. However, FCA regulation does NOT guarantee your investment is safe - you can still lose money if borrowers default.

CapitalRise

Property Development

FCA Regulated

Property development loans with security over land and buildings.

Expected Return

6-8%

Min. Investment

£100

FSCS Protected

No

CrowdProperty

Property Development

FCA Regulated

Short-term property development finance secured against UK property.

Expected Return

7-9%

Min. Investment

£1,000

FSCS Protected

No

Lendwise

Education Finance

FCA Regulated

Education loans for postgraduate students at top UK universities.

Expected Return

5-7%

Min. Investment

£100

FSCS Protected

No

Kuflink

Property Bridging

FCA Regulated

Bridging loans secured against UK residential and commercial property.

Expected Return

5-7%

Min. Investment

£1,000

FSCS Protected

No

CapitalStackers

Property Development

FCA Regulated

Property development and bridging loans with first charge security.

Expected Return

6-8%

Min. Investment

£500

FSCS Protected

No

Loanpad

Property Finance

FCA Regulated

Property-backed loans with security over UK residential property.

Expected Return

6-9%

Min. Investment

£100

FSCS Protected

No

Proplend

Property Development

FCA Regulated

Property development finance with first legal charge security.

Expected Return

7-10%

Min. Investment

£500

FSCS Protected

No

Invest & Fund

Property Finance

FCA Regulated

Property-backed lending with security over UK property assets.

Expected Return

6-8%

Min. Investment

£1,000

FSCS Protected

No

Who Should Consider an IFISA?

IFISA May Be Suitable If You:

  • ✓Have room in your £20,000 annual ISA allowance and want to diversify
  • ✓Understand and accept the high risk of losing money
  • ✓Can afford to lock money away for months or years
  • ✓Want to diversify beyond traditional stocks and bonds
  • ✓Are a higher-rate taxpayer seeking tax-free income
  • ✓Have experience with investing and understand P2P lending risks

IFISA is NOT Suitable If You:

  • ✗Cannot afford to lose the money you invest
  • ✗Need quick access to your money (emergency fund)
  • ✗Are new to investing (start with Cash or S&S ISA first)
  • ✗Don't understand how P2P lending works
  • ✗Want FSCS protection on your savings

Key Takeaways About IFISA

Benefits:

  • • Tax-free returns on P2P lending
  • • Potentially higher returns than Cash ISA
  • • Diversification from traditional investments
  • • Same £20,000 annual ISA allowance

Risks:

  • • NO FSCS protection - can lose everything
  • • Illiquid - money locked in for months/years
  • • Borrower default risk
  • • Platform failure risk

Need Help Understanding Your Options?

IFISA is complex and high-risk. Before investing, consider speaking with a financial adviser to understand if it's right for your situation.

Compare Standard PlatformsBack to Investment Education