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Alternative Finance blog

Despite low visibility IFISA attracts an average account size of £8,500 and £17m in its first year

2 years ago

HM Revenue and Customs (HMRC) data released today shows that £17 million was invested in Innovative Finance ISAs (IFISAs) in the 2016/2017 tax year. 


Launched in April 2016 some commentators will consider the figure disappointing relative to the £22 billion and £39 billion invested in Stocks & Shares and Cash ISAs respectively. However, Sacha Bright, CEO of businessagent.com the authorised aggregator for P2P and equity crowdfunding for business in the UK disagrees; "With just 14 IFISAs available at the end of the last tax year, none of which were available on the largest peer-to-peer (P2P) lending platforms, this figure looks encouraging." He said. "It may be a slow start, but remember that P2P is a new investment sector which was only recognised as such by the Regulator (the FCA) after the end of this tax year. Stocks and Shares and cash ISAs have been around for more than 20 years now and a lot of people still don't know what they are. Interest in IFISA is growing and we would expect to see that in the take-up for the 2017/18 tax year."


According to HMRC the average amount of money invested in cash ISAs was £4,622. The average amount invested in a stocks and shares ISA was £8,623. The average amount invested in an IFISA was £8,500 - perhaps reflecting investor understanding that P2P lending is a type of investment where returns can go down as well as up. 


Bright continued; "Financial Advisers have been cautious about recommending P2P investment or IFISAs to their clients. With the FCAs review of the sector expected in September and the low yields of traditional high yielding investments like bonds and equity income relative to P2P estimated annual yields of 4% to 12%, perhaps 2018 will be the year that P2P warms up."

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