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How To Lend Across Multiple IFISAs In One Year!

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By on 25 May, 2021 | Read more by this author

As you may know, you can only open one IFISA in a tax year, which runs from the 6th of April to the 5th of April, and this limits your ability to spread your money and the risks across lots of providers.

But you're wrong!

You're actually allowed to open lots of Innovative Finance ISAs in one tax year. The rule is that you're not allowed to put new money into more than one IFISA. So it's possible to create a portfolio of half-a-dozen IFISAs and hundreds or thousands of loans over the course of a few weeks, rather than years, in order to rapidly shrink the risks of lending even further.

Opening more than one IFISA

HMRC has confirmed to 4thWay that there's no limit to the number of IFISAs you may open in a year. The rules just mean that any new money invested between the 6th of April one year and the 5th of April the following year must always be in a single IFISA. Presumably, this rule makes it easier to ensure that annual ISA limits are not breached.

In other words, you can 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.

You may open as many IFISAs as you want at any time with the intention of transferring in different pre-existing cash ISAs, share ISAs or IFISAs into those new IFISAs.

Indeed, there's no limit to this. You can often even split up a single, older ISA into several new IFISAs through partial transfers…

Partial transfers from other ISAs spread your money even faster

If you just have one or two other ISAs, some IFISA providers allow you to make partial transfers out and, on the other side, to transfer in part of the money from an existing ISA.

So it's pretty easy to split an old ISA into several new IFISAs. You create a large portfolio of IFISAs and loans over the course of a few weeks, rather than years, rapidly shrinking the risks of lending even further.

Assetz Capital*, CrowdProperty, HNW Lending*, Invest & Fund, Kuflink*, LandlordInvest, Loanpad*, Money&Co, Proplend* and Sourced Capital* have confirmed that they will allow partial transfers in and out of their IFISAs, with no special fees or small print. That is not a complete list, but it is nine out of ten IFISA providers that we have asked, so I am sure that most others do so as well, if you ask them.

Cash ISAs and share ISAs usually allow partial transfers out of cash, too. For example, the latest terms and conditions for Hargreaves Lansdown's popular Stocks & Shares ISA allows partial transfers out to other ISAs. Similarly, small print for Nationwide Building Society's cash ISAs allows for partial transfers out.

What this means is that you could lend across a half dozen or more IFISAs with relative ease within about a month through partial transfers from an existing ISA or 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 doubly 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. The same applies to interest or gains made on new money. That money becomes “old” as soon as the 6th of April arrives again, in which case it can be split up and transferred out as much as you want.

An example for even more clarity

Let's say you have put £10,000 into your ISAs over the past few years and that pot has grown to £12,000. Next tax year, you want to put in an additional £5,000 into tax-free P2P lending.

That £5,000 will need to all go into one IFISA and it can't be split into more IFISAs until the start of the following tax year. However, the other £12,000 can be split into as many IFISAs as you want, and you can open as many new IFISAs as you want to do so, right away.

What if you have no other ISAs?

If you have no other ISAs right now, you can open several Innovative Finance ISAs before the end of the tax year while putting money into just one of them. At the start of the new tax year, you can put new money into one of the other IFISAs, and transfer out part of the money in the first IFISA to each of the others you opened. So you still spread your money around quickly.

You can also diversify by opening other, “normal” P2P lending accounts, which still typically pay attractive interest rates and, for most people, they will also be tax free.

Read more:

The Peer-To-Peer IFISA Guide.

How Is Peer-to-Peer Lending Taxed?

Compare IFISAs.

Best Innovative Finance ISAs.

The author is not a lawyer or tax specialist and 4thWay's content does not constitute advice.

Independent opinion: 4thWay will help you to identify your options and narrow down your choices. We suggest what you could do, but we won't tell you what to do or where to lend; the decision is yours. We are responsible for the accuracy and quality of the information we provide, but not for any decision you make based on it. The material is for general information and education purposes only.

We are not financial advisors, which means that we don't offer advice or recommendations based on your circumstances and goals.

The opinions expressed are those of the author(s) and not held by 4thWay. 4thWay is not regulated by the ESMA or the FCA. All the specialists and researchers who conduct research and write articles for 4thWay are subject to 4thWay's Editorial Code of Practice. For more, please see 4thWay's terms and conditions.

*Commission and impartial research: our service is free to you. 4thWay shows dozens of P2P lending accounts in our accurate comparison tables and we add new ones as they make it through our listing process. We receive compensation from Assetz Capital, HNW Lending, Kuflink, Loanpad, Proplend and Sourced Capital, and other P2P lending companies not mentioned above when you click through from our website and open accounts with them. We vigorously ensure that this doesn't affect our editorial independence. Read How we earn money fairly with your help.

4 responses to “How To Lend Across Multiple IFISAs In One Year!”

  1. Janos Ratkai says:

    Hi
    Instead of “you can only open one IFISA in a tax year”
    would you write “you probably thought you can only open one IFISA and one ‘cash ISA’ and one ‘stocks and shares ISA’ (i.e. possibly all 3 kinds of ISA, maximum 1 of each kind) in a tax year”?
    If you open one ‘cash ISA’ and/or one ‘stocks and shares ISA’, put new money into them, then (partially) transfer these to newly opened IFISAs, is not that the legal way to put new money into as many new IFISAs as you like?

    • Neil Faulkner says:

      Hi there

      You can’t partially transfer new contributions, i.e. money you have contributed in the current tax year. If you contribute £10,000 to an IFISA in a tax year, you can’t transfer half of that to another IFISA in the same tax year. New contributions have to be transferred in full.

      You can only partially transfer money from previous years and their gains. So if you contributed £10,000 one tax year, the next tax year you could then transfer £5,000 of that to a different IFISA and, if you want and are allowed by the individual providers, you could transfer the other £5,000 to a second IFISA – for example.

  2. Janos Ratkai says:

    OK. My point was using possibly all 3 kinds of ISA. Even if you fully transfer 3 kinds of newly opened ISAs, does not it enable having new money in at least 3 new IFISAs?

  3. Bob hope says:

    There doesn’t seem to be anything, apart from conscience or fear of getting caught, to stop me opening many new ifisa’s for new money? How will “they” know?

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Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers two “bonds”, one of which is available as an ISA.

Unlike its P2P lending service, neither of these bonds allows you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

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Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers two “bonds”, one of which is available as an ISA.

Unlike its P2P lending service, neither of these bonds allows you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

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Why are Orchard’s interest rates different?

Orchard’s lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Orchard’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

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Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers “bonds”. Unlike its P2P lending service, its bonds don’t allow you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

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