Your ISA Account options ?
It has been available since April 6th 2016 and is one of 4 types of ISA accounts in which you can invest £ 20,000.00 per tax year (as at tax year 19/20), in one or more of the following:
Stocks and Shares ISA
Cash ISA
Innovative ISA
LISA (Lifetime ISA) (£ 4000.00 maximum)
All income, interest and capital gains earned within any of the above products are free from taxation, including income, interest and capital gains.
Who can open an Innovative ISA ?
Innovative ISAs can be opened by any UK resident over the age of 18. If the investor ceases to be a UK resident, they should inform their ISA provider at the earliest opportunity. Their ISA account will remain open, but they will not be allowed to make new subscriptions
What can be held in an Innovative ISA account ?
An innovative ISA account was created to allow holders to invest in peer to peer loans within the tax-free ISA wrapper. Here the investor is making a serious of small loans to individuals and small businesses. As such the interest rate earned will be much greater than available on a Cash ISA, but, of course, there is significantly more risk involved as there is the potential for some of those loans to default.
Innovative ISA account providers will usually offer the investor the option to choose the level of risk they are comfortable with. Hence the investor can invest in riskier loans offering higher returns, or choose safer loans with lower interest rates, but with lower risk of default.
Crowdfunding debentures can now also be invested within an innovative ISA account. These act like normal company bonds, giving the investor the opportunity to lend money to established businesses for a set period of time and receive regular set repayments. Again, as with traditional bonds, there is the potential for the company to default on the loan. It should also be noted these securities are not listed on any stock market or exchange. Though they can be sold to another investor, it is more likely you will hold till maturity.
Peer to peer lending will offer greater diversity, as you are lending to a large number of individuals or small businesses, rather than to one company, as with crowdfunding debentures.
Transfers
Funds held within a Cash or Stocks and Shares ISA can be transferred into an innovative ISA account and vice versa. This does not affect your yearly ISA allowance, currently £ 20,000.00.