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The benefits of investing through an IFISA

In April 2016, the UK Government introduced the Innovative Finance ISA (IFISA), which sits alongside both the traditional Cash and Stocks & Shares ISAs. It is a new ISA category that enables investors to receive any returns they make on eligible crowdfunded investments tax-free.


Investing into an IFISA eligible Shojin project means that any returns you make will be tax-free. It is important to note that tax treatment depends on the individual circumstances of each investor and may be subject to change in future. Investment in Shojin  IFISAs  is on a project by project basis. Therefore, your return will vary according to the project you choose to invest in.


The ISA allowance for the 2017/18 tax year is £20,000. This is the maximum amount of new funds you can invest across all types of ISAs in the tax-year. You can put your whole allowance into a particular type of ISA or you can split it between the different types of ISAs: Cash, Stocks & Shares, Lifetime and Innovative Finance.


An IFISA allows individuals to lend money to businesses for a period of time. The extent of risk of the investor’s capital is dependent on the borrower’s ability to repay the loan. With every investment, there is always an element of risk, and this should be reflected in the level of return the investor should expect to receive. To find out more about the risks associated by investing in an IFISA with Shojin Property Partners please see our Key Risks document.


Peer to peer lending is a form of investing, where lenders’ cash is matched directly to a borrower via an online platform enabling them to lend without the need for a bank. Ultimately, the individual lender acts as a bank and together with other individual lenders forms the crowd which is able to raise significant amounts for the borrowers. This is where the term Crowdfunding is derived from. Peer to peer and crowdfunding platforms are now able to provide Innovative Finance ISAs (IFISAs) since they were launched by former Chancellor George Osborne in 2015. Shojin has been approved as an ISA manager and is able to provide its investors with ISA eligible projects with the associated tax benefits.


There are several ways of funding your IFISA. You can utilise your annual ISA allowance, transfer in existing ISAs that you already have from previous tax years or do both. In order to make use of this year’s allowance, first you need to top-up your Classic Wallet and then transfer the funds from there into your IFISA Account.


During the tax year, you are able to invest into one of each type of ISA. Either Cash, Stocks & Shares, Lifetime and Innovative Finance. However, investors can have multiple ISAs with different providers that have been opened in previous tax years.


Cash ISA: A cash ISA is essentially the same as a traditional savings account, except there are limits on the amount of cash you can transfer in and there is no tax to pay on the interest you earn.

Stocks & Shares ISA:
 Like a Cash ISA, Stocks & Shares ISA is a tax efficient way to invest. You can put your ISA allowance into a range of investments such as cash, government or corporate bonds or stocks and shares. Or you can choose a fund which combines a mix of different asset classes.

Lifetime ISAs:
 The Lifetime ISA is a longer-term tax-free savings account that provides you with a government bonus of 25% of the money you put in, up to a maximum of £1,000 a year. As with other ISAs, you won’t pay tax on any interest, income or capital gains from cash or investments held within a Lifetime ISA. Lifetime ISAs can hold cash, stocks and shares qualifying investments, or a combination of both. You can save up to £4,000 a year and can continue to pay into it until you reach 50. The account can stay open after then, but you can’t make any more payments into it. Your savings will be kept on a tax-free basis for as long as you keep the money in your Lifetime ISA.

Innovative Finance ISAs:
 The Innovative Finance ISA (IFISA) is a type of ISA that allows you to include investments that have been made via crowdfunded bonds, share and peer-to-peer loan offers. As with all ISAs, you receive interest tax-free.

Help to Buy ISA:
 Like normal cash ISAs, they enable you to save tax-free, but they are specifically for first-time buyers. The maximum you can save each month into a Help to Buy ISA is £200, although you can make an initial contribution of up to £1,200 in the first month if you can afford to. You’ll receive the government cash bonus when you reach the completion stage of buying your home and close down your ISA.

Junior stocks and Shares ISA:
 Junior ISAs are a tax-free way to save for your children. The money can only be accessed after the child turns 18. Like standard ISAs, Junior ISAs can be held in cash or stocks and shares, or you can divide the allowance between both.

Flexible ISAS:
 Flexible ISAs allow you to withdraw money from your ISA and replace withdrawn funds within the current tax year without affecting your ISA limit of £20,000. Some ISAs do not offer this flexibility. You can still withdraw money from your account. However, if you replace it later, this will use up more of your annual ISA allowance. Depending on how much you have already contributed, you might find you aren’t able to replace all of it because you would exceed the annual limit. This gives the investor the benefit of flexibility of withdrawing ISA funds when they need to, without using up their annual limits on transfers back into the ISA. To find our more about the Shojin IF ISA please visit our FAQ page.

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