The main draw of an ISA for many investors tends not to be the returns earned, since they can sometimes be marginal; for example, Lloyds Bank has a Cash ISA rate 0.35% p.a.; it's the fact it offers eligible investors the opportunity to have part of their savings untaxed.
With the introduction of the CrowdLords IFISA, eligible investors now have a dynamic tax-free saving option, that gives investors an easy subscription and allocation process that those who have already invested in ISAs are familiar with.
That being said, there are some common questions investors tend to ask so we've set out to answer those most frequently asked below. As with all investing, it should be noted that your capital is at risk when investing with CrowdLords and returns are not guaranteed. Tax treatment is dependent on individual circumstances and subject to legislative change.
What is the IFISA and how is it different to other ISAs?
An ISA is best described as a "wrapper" to cover savings and investments from being taxed. We've covered all the different types of ISAs before, so please check out this article. But in short, the main ones are a "Cash ISA" which is a short-term savings option, typically less than 5 years, which pays interest on the savings at a fixed or variable rate; and a "Stocks and Shares ISA" which allows savers to invest in shares and securities, typically more than 5 years, where savers can gain in the form of growth in the stock value and / or dividends.
IFISAs allow savers to become "lenders" using a platform like CrowdLords to potentially earn tax-free interest on their lending activities. One of the main differences between IFISAs and other types of ISAs is that the IFISAs are not covered by the FSCS, and as with all investment-based crowdfunding activity, your capital is at risk, meaning you could lose some or all of the money you put in.
How much can I invest in the CrowdLords IFISA?
You can invest up to £20,000 across all of your ISA investments in the current tax year. If you have existing Cash or Stocks and Shares ISAs, you are able to transfer an unlimited amount of these existing ISA funds to the CrowdLords IFISA.
Do I have to report my CrowdLords IFISA earnings on my tax returns?
You will not have to report your IFISA tax returns to HMRC, as your ISA manager will report your ISA holdings to HMRC on your behalf, but keep in mind that there is no tax payable on any returns from the CrowdLords IFISA.
Is there a deadline for ISA transfers?
There are no deadlines, you can transfer your existing ISA from other providers to the CrowdLords IFISA at any time during the financial tax year. ISA transfers are not subject to deadlines like new ISAs, so if you're looking to set up your IFISA if you haven't already, please do so before the 5th of April.
How many ISAs can I subscribe to?
You are allowed to open one ISA of each type in each financial year, so basically one IFISA, one Cash ISA and one Stocks and Shares ISA. You cannot deposit more than the £20,000 allowance across all the ISAs, but there is no upper limit for transfer from previous accumulations.
What can I invest in with the CrowdLords IFISA?
All our investments are related to residential property, and include the development of land, conversions and refurbishment of an existing building, or providing a loan to help supplement the purchase of a property. With our IFISA investments, you will be purchasing a bond issued by a CrowdLords SPV that holds the security. The CrowdLords IFISA may be worth considering if you're interested in investing in property in a less risky way compared to our equity investment offerings.
Is CrowdLords now a P2P lending platform?
Peer-to-peer (P2P) lending involves individuals lending to other individuals or businesses, however CrowdLords is not considered a P2P lending platform because investors lend to an SPV in return for a bond, and the SPV lends the money to a business (who will use the funds to finance their project/property) and arranges the security.
How many IFISA investments can I take part in on CrowdLords?
You can invest in as many IFISA investments as you like, providing that you are within your ISA allowance and you only have one IFISA provider.
We're big believers in diversifying your portfolio, and best practices state that you should invest your funds across different types of investments ranging in term, returns and locations. Our minimum investment for IFISAs is often as low as £250, which means you can easily allocate your funds across multiple investments as and when they become available.
Can I take funds out of my CrowdLords IFISA e-wallet? And if so, can I top it up again?
Yes, you can. The CrowdLords platform is quite flexible in the sense that you can transfer funds out of you IFISA e-wallet, and into your regular investment e-wallet, which you might want to do if you want to invest in any of our equity investments. You will also be able to add funds back to your IFISA e-wallet, as long as it does not take you over your annual allowance.
How long does the ISA transfer take?
Transferring your ISA to the CrowdLords IFISA can take anywhere from a few days to a couple of weeks; it will depend on your current provider, and the amount you are transferring. In our experience, high-street banks are the quickest, and private ISA providers do generally take a bit longer.
What are the CrowdLords IFISA fees?
There are no fees involved in setting up your IFISA account, and we do not charge you if you wish to transfer out.
What and how do I need to set up my CrowdLords IFISA account?
You will need to be registered on CrowdLords, if you're not already, and will have to provide a photo ID, passport or driver's license, for the mandatory KYC check. From your portfolio, you can click on "Open IFISA account", read and accept the Terms and Conditions, enter your National Insurance number, and hit "Continue". If you are transferring your IFISA, please click here to follow the instructions. To be eligible, you will have to be a UK citizen.
How do CrowdLords IFISA target returns compare to other ISAs?
Cash ISAs are covered by the FSCS, which means that if for any reason the provider were to fail, you will be entitled to receive back your capital, to a maximum of £85,000, which is underwritten by the government. However, the interest rates produced from Cash ISAs are generally considered low and if we add the cost of rising inflation, this could result in a negative "real" return.
Although the CrowdLords IFISA targets interest rates often over 10% p.a., the loans are not covered by the FSCS, which means they have a higher risk profile than Cash ISAs. CrowdLords works to mitigate some of the risks by securing the loan against the property (asset-backed), which would be sold if the borrower defaults on any repayment obligations. CrowdLords debt investments can either be 1st Charge or 2nd Charge, to learn more about the Capital Stack, read our article. Investors should read the full risk warning before deciding to invest in a CrowdLords IFISA.
Are all the investments on the CrowdLords platform IFISA eligible?
No, only certain debt investments are IFISA eligible. The debt investments are highlighted on the CrowdLords platform and marked as IFISA eligible.
Is the CrowdLords IFISA a Flexible IFISA, and what is a Flexible IFISA?
The CrowdLords IFISA is fully flexible, meaning that you can access your funds, unless they're currently being used in a loan that you have chosen, throughout the year, and replace anything you withdraw before the tax year ends on the 5th of April. A key point to remember, and what might make investing in an IFISA attractive, is that this will not affect your annual ISA allowance.
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