The new IFISA rules explained
Chancellor Jeremy Hunt made sweeping changes to the ISA market during his Autumn Statement this week, and there were a few surprises for Innovative Finance ISA (IFISA) providers and their investors.
Despite rumours that the chancellor could scrap the IFISA altogether, the tax-free investment wrapper was actually expanded to include more products. Investors also welcomed a streamlining of the IFISA investment process, which will make it easier to diversify their tax-free portfolios.
Here are the three key changes to the IFISA rules, and what they mean for IFISA investors.
Read more: Public interest in IFISAs rose 150pc this year
- Investors can now open multiple IFISAs per year
To date, investors have been limited to opening just one new IFISA account per tax year. However, this restriction will be lifted in April 2024, allowing savvy IFISA investors to choose several peer-to-peer lending platforms and other IFISA providers to back. Investors can still place the full £20,000 annual ISA allowance into one provider, or they can spread their money across a number of different IFISA accounts.
- IFISAs are not just for P2P anymore
The chancellor has extended the remit of the IFISA, allowing long-term asset funds and open-ended property funds to be held within the tax wrapper. This is likely to lead to a sharp rise in the number of IFISA providers on the market as asset managers and other fund managers become authorised IFISA managers to attract tax-efficient investors.
Read more: Future of the IFISA in doubt
- Partial transfers are now permitted
The government has made it easier for investors to switch ISA providers by making it possible to do a partial transfer of ISA funds regardless of when the money was paid in. This means that IFISA holders will be able to transfer any money that has been invested or earned in previous tax years into another IFISA provider without having it impact their annual £20,000 limit. This should help to promote more competitiveness in the ISA market as providers vie for client money.
Read more: Autumn Statement: IFISA remit extended
