£17m invested into Innovative Finance Isas

HMRC has revealed that 2,000 Innovative Finance individual savings accounts (IFIsas) were opened during the last tax year.

The average investment into IFIsas during 2016/17 was £8,500 which meant £17m was invested collectively.

HMRC also reported that the amount invested in cash Isas had fallen from £58.7bn in 2015/16 to £39.2bn in 2016/17, while investment in stocks and shares Isas edged up from £21.1bn to £22.3bn.

Isas were introduced on 6th April 1999, replacing the earlier personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs).

Isas are tax exempt and the estimated exchequer cost of the tax relief for Isas in 2015/16 was around £2.6bn.

The government introduced the IFIsa in April 2016, which enabled savers to use their annual Isa investment allowance to lend funds through the P2P lending market.

This year, a number of lenders, including Octopus, Folk2Folk and Kuflink, have announced the launch of IFIsa products to their customers.

Richard Stone, chief executive of the Share Centre, said: “While the latest data from HMRC shows a substantial fall in Isa subscriptions, it is interesting to note that the fall is wholly down to a drop in amounts saved into cash Isas.

“Specifically, rates in real terms continue to be negative – holding savings in cash effectively costing savers money in terms of the purchasing power of those savings over time.

“As inflation has increased, this problem has only become more exaggerated and this data from HMRC potentially shows savers reaction to that.”

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