Synopsis: HMRC has published draft regulations, which are subject to consultation, to establish a new type of ISA – the innovative finance ISA.

HMRC has published draft regulations together with explanatory notes establishing a new innovative finance ISA which is to be available from 6 April 2016.

The draft regulations are subject to consultation until 1 February 2016. It is intended that these regulations will amend the Individual Savings Account Regulations (S.I. 1998/1870) from 6 April 2016, to establish a new type of ISA – the innovative finance ISA.

Under this new account, interest and gains from peer-to-peer loans paid into an ISA can benefit from the ISA tax advantages.

Individuals aged 18 or over will be entitled to subscribe to an innovative finance ISA, which will be offered by peer-to-peer lending platforms with the appropriate regulatory permissions. Any investment amount will count towards the maximum ISA subscription which is currently £15,240 (2015/16 and 2016/17).


This consultation will be of interest to individuals making peer-to-peer loans, peer-to-peer lending platforms and to ISA providers and investors.

Since the introduction of the ‘new ISA’ in July 2014, when subscription limits were increased together with the ability to invest in a wider range of investments, the government appears to be keen on expanding ISA flexibility. This measure therefore provides another level of flexibility for ISA savers because, as a result of these changes, an ISA investor will be entitled to subscribe new money each year to a maximum of one innovative finance ISA, one cash ISA and one stocks and shares ISA, subject to the overall ISA subscription limit for the year. However, whether this will become a popular choice with ISA investors is yet to be seen.


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