The RateSetter IF ISA product range includes four options with terms ranging from one month to five years.

Investors can accept the interest rate set in the markets, or choose to set their own rate. If they set their own rate, they may have to wait longer to find a willing match. There will be no management fees for investors.

The four products – and the rates at the time of writing are:

• One month term – 2.8%
• One year term – 3.8%
• Three year term – 4.3%
• Five year term – 5.7%

The IF ISA will be available to new and existing customers and the standard ISA allowance (£15,240 for 2015/16) will apply.

Investors can transfer from existing cash and stocks and shares ISAs, while retaining their tax-free status.

According to RateSetter, the launch of the IF ISA could save higher rate taxpayers as much as £376 in tax per year.

Innovative Finance ISAs: what you need to know

• This new type of ISA launches in April 2016 and means peer-to-peer investments will be able to be saved within a tax wrapper.
• RateSetter is the first provider to release details of its IF ISA but others are expected to announce plans ahead of the April 2016 launch date.
• Peer-to-peer lenders still do not fall under the Financial Services Compensation Scheme (FSCS), which protects your money in the event a firm goes bust.

What is peer-to-peer lending?

• Peer to peer lending platforms such as RateSetter, Zopa and Funding Circle, match savers who lend money with individuals and businesses who borrow money, cutting out the middle men such as banks.
• The relatively high rates of interest available have made them a popular choice for savers.
• Peer-to-peer lenders lent more than £2.2bn in 2015, according to latest figures from the sector’s industry body, The Peer-to-Peer Finance Association (P2PFA).