How liquid are IFISAs?
Innovative Finance ISAs (IFISAs) – the tax wrapper around peer-to-peer loans – are typically designed for longer-term investments. However, there may be times when a lender wants to release money from an ISA investment early.
In order to do that, many platforms offer secondary markets where loans can be sold on at their current value, usually for a small administrative fee.
Not all platforms have a secondary market, and of those that do, not all of them enable the sale of loans within an IFISA.
Read more: What is an IFISA?
The aim of an IFISA is to realise tax-free returns of up to £20,000 per year, which means that leaving the money invested will see the greatest returns.
However, for those who need, or want, to release their investment early, here are six peer-to-peer platforms that enable lenders to potentially sell their IFISA loans on a secondary market.
Read more: IFISA Guide
Abundance
Abundance is an ethical lender, offering IFISAs at a minimum investment of £5 and with an average return of up to eight per cent. The platform has a secondary market, on which all loans are eligible for sale, including those within an IFISA. Abundance prides itself on being early to install a secondary market and has upgraded the process for sellers over time, making it quick and easy to use.
CapitalRise
You can invest in a CapitalRise IFISA from £1,000 and the average return is up to 11 per cent. The platform offers a Bulletin Board where investors can post their investment for its current value. If another CapitalRise member chooses to purchase the investment at its current value, the seller is emailed to accept the sale. CapitalRise will repay the original investment amount plus the return that had accrued up until it was posted for sale. The platform charges a fee of 1.5 per cent, which is deducted from the payment.
EasyMoney
Investment in an EasyMoney IFISA is available from a minimum of £100 and investors see average returns of between 4.53 and 6.51 per cent. The platform’s IFISA is a flexible ISA, which means investors are able to take money out without the money losing its tax-free status, as long as it’s repaid before the end of the tax year. To withdraw investors must first sell their loans from the ‘My Portfolio’ section of their account. The loans must be performing and not within one month of repayment to sell. As with any secondary market, the sale relies on new investors being willing to buy the loans, so instant access is not guaranteed.
Folk2Folk
You can invest in a Folk2Folk IFISA from £20,000 and the average return ranges from 7.5 per cent to 9.5 per cent. To withdraw or transfer to another ISA provider from the loan early, investors can offer their investment loan for sale to other lenders via the secondary market. The platform charges a fee for the secondary market and offers no guarantee that another lender will purchase the loan investment. In this case, investors would need to remain in the loan until the borrower redeems.
Kuflink
Kuflink offers IFISA investments from £100 and delivers an average return of up to 9.73 per cent. The platform added the ability to buy and sell select IFISA loans on its secondary market last year. At the same time, the platform launched a lender app and released an ISA wallet to separate lenders’ ISA allowance for the current and previous tax years. It also allowed lenders to compound their interest to earn better returns on its auto-invest and IFISA products and to re-term their IFISA and auto-investments up to 190 days prior to their expiry.