How To Lend Across Multiple IFISAs In One Year!
As you may know, you can only open one IFISA in a tax year, which runs from 6th April to 5th April, and this limits your ability to spread your money and the risks across lots of provider.
But you're wrong!
You are actually allowed to open lots of IFISAs in one tax year. The rule is that you're not allowed to put new money into more than one IFISA.
Therefore, you could open an IFISA for new money, which is capped at £20,000. And you could open another new IFISA at the same time, into which you might transfer other, older money from an IFISA that you contributed to in an earlier tax year.
Indeed, there is no limit to this. If you have yet more ISAs, be they IFISAs, cash ISAs, or stocks and shares ISAs, you could therefore easily diversify into lots of IFISAs in the space of one month, by opening several IFISAs and transferring those pre-existing amounts. This dramatically lowers your risks.
Partial transfers might help too
In addition, if you don't have a large number of other ISAs, some IFISA (and other ISA) providers allow you to make partial transfers out and, on the other side, to transfer in part of the money from an existing ISA. Therefore you could split an old ISA into several new IFISAs.
CrowdLords, CrowdProperty, FundingSecure, HNW Lending*, Landbay*, Loanpad*, Money&Co and MoneyThing have confirmed that they will allow partial transfers in and out, with no special fees or small print. That is not a complete list and I am sure that others do so as well, if you ask them.
What this means is that you could lend across a half dozen or more IFISAs with relative ease within about a month, by transferring from other existing ISAs. You don't have to wait a whole year to open your second ISA, then another year for the third, and so on.
Just to be clear, though, you can only do partial transfers of money you contributed in previous tax years. New money contributed in the current tax year has to stay where it is or be transferred in full.
Theory and practice aren't always the same
It is astounding how differently P2P lending sites interpret – or misinterpret – various technical details related to regulation, law, taxes and IFISAs.
So you might find that some P2P lending sites are not as flexible as they are allowed to be.
What if you have no other ISAs?
If you have no other ISAs, you can still diversify by opening other, “normal” P2P lending accounts, which still typically pay attractive interest rates. If you don't want to do that, at least diversify by putting some of your savings into savings account, the stock market, or other investments.
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