Innovative Finance ISA: What It Is and the 2027 Rules
Innovative Finance ISA promises 7-12% returns by lending your money to strangers. Zero FSCS protection. Three UK platforms collapsed since 2019. Honest take inside.
IFISA vs Cash ISA: where your money sits in a failure
Cash ISA cash is bank-deposit, FSCS-covered. IFISA money is a loan to a platform user, with no compensation if either fails.
Key takeaways
An Innovative Finance ISA shelters interest on peer-to-peer loans and crowdfunded debt from UK tax. The £20,000 ISA allowance is shared across all wrapper types.
IFISAs are NOT FSCS-protected. If the platform fails, you can lose your entire investment. Several UK P2P platforms have collapsed since 2019.
From April 2027, the same anti-circumvention rules that hit stocks and shares ISAs also hit IFISAs: a charge on cash interest, a ban on transfers into cash ISAs, and cash-like tests on what counts as an investment.
For most UK savers, an IFISA is not worth the risk. The yield premium over a cash ISA rarely compensates for the platform-collapse risk it carries.
