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Zopa latest peer-to-peer lender to reveal details of its IFISA

Paloma Kubiak
Written By:
Paloma Kubiak

Peer-to-peer lender Zopa has revealed further details of its Innovative Finance ISA which will be available from April.

The Zopa IFISA product range will offer customers the same rates as those on its standard lending platform which are as follows:

  • 1/2/3 year lending: 3.8% annualised return (pre-tax)
  • 4/5 year lending: 5% annualised return (pre-tax).

Its IFISA will also be a Flexible ISA which allows customers to withdraw funds from the account without losing the annual tax-free allowance.

As an example, if you invest £15,240 (the maximum 2015/16 limit), and you then withdraw £5,000, you’ll still be able to top it up by £5,000 to earn tax-free interest.

Investors can also transfer from existing cash and stocks and shares ISAs to Zopa’s IFISA, while retaining their tax-free status.

The peer-to-peer lender said it’s not going to introduce any additional fees or charges on its IFISA range for savers, though for borrowers, they’ll pay a ‘loan servicing fee’.

Zopa, which has lent £1.3bn since it was founded in 2005, added that it’s working on a new range of products that it expects to launch ahead of the IFISA from 6 April, though details are still to come.

Earlier this week, Ratesetter became the first peer-to-peer lender to unveil its IFISA rates.

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.
  • Peer-to-peer lenders do not fall under the Financial Services Compensation Scheme (FSCS), which protects your money up to £75,000 in the event a firm goes bust.
  • Only peer-to-peer lending platforms with a full Financial Conduct Authority will be able to offer customers the new IFISA – Zopa says it expects to receive the permission in the “coming weeks”.

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).