Zopa, Funding Circle and RateSetter may be missing from this year’s ISA season but investors still have plenty of choice if they want tax-free returns from their peer-to-peer loans.
Pre-pandemic, the so-called big three P2P lenders – Zopa, Funding Circle and RateSetter – would have dominated the Innovative Finance ISA market (IFISA).
But over the past year, RateSetter has exited the sector after being acquired by Metro Bank, Zopa has closed its P2P arm to focus on banking and Funding Circle is focusing on its recovery lending scheme support for now.
Even without the big three, investors can still get decent returns on their P2P loans and gain exposure to a variety of investments.
Here are some of the IFISA options available to P2P investors from the sector’s major platforms.
Assetz Capital – Back an established platform
Business and property lender Assetz Capital has a loanbook worth £1.4bn, making it the largest currently active P2P lender.
It is also one of the most established players, having launched in 2013.
Investors can earn 4.33 per cent from its manual lending accounts based on the target rate and forecasted defaults, according to P2P analyst 4th Way.
LandlordInvest – High rates
P2P Property lender LandlordInvest has only been around since 2017 and its loanbook is worth £13.5bn.
It offers some of the most attractive IFISA rates on the market, with returns of 10.84 per cent after bad debts, 4th Way claims.
CrowdProperty- Invest in property loans
With a loanbook worth £185m, CrowdProperty manages to rank among the largest P2P lenders.
It offers development and bridging loans that you can select manually or have your money invested and diversified automatically
The platform offers an IFISA rate of 7.63 per cent after bad debts, 4th Way data shows.
Abundance Investment – Go green
Investors can back green and renewable projects through crowd bonds platform Abundance.
Investors have backed £122m of projects including local council community municipal bonds.
Returns on many of its projects can also be earned tax-free but the rate will depend on the individual investment.
Lendwise – Education investment
Lendwise launched the first education-backed IFISA last month.
It targets returns of between four per cent and 12 per cent, with a minimum investment of £1,000.
All IFISA investments will be used to fund the platform’s education loans, which are primarily used by post-graduate students seeking a fixed rate loan to fund their studies. Loan repayments typically start six months after graduation.
Fund Ourselves – Back consumer loans
The exit of Zopa and Lending Works from P2P lending means there isn’t much choice if you want to back consumer loans through an IFISA.
Fund Ourselves is one the few remaining consumer players with an IFISA.
It offers targeted returns of up to 15 per cent for backing its short-term loans.