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HMRC Confirms You Can Open Multiple IFISAs In One Year!
We told HMRC that, reading the rules for ISAs, “they don't actually prohibit people opening multiple IFISAs in one tax year, provided they only subscribe new money to one of them”… Do they?
A representative from HMRC has told us this “looks correct”. That's about as definitive as it gets from HMRC, which is often much more cagey than that when giving out guidance!
This is massive for IFISA investors!
This is truly a very important point that most lenders still do not understand, for which we now have official confirmation after years of interpreting the Innovative Finance ISA rules for you for ourselves in How To Lend Across Multiple IFISAs In One Year!
The restriction is that new money you put in after 6th April has to all be kept together in a single IFISA until the following tax year. (You're even allowed to move new money during the tax year to another ISA, either a new or old one, provided it all is kept in one place until the 6th of April comes round again.)
Rapid IFISA diversification is therefore just a few weeks away
While you might be sad that the £20,000 annual ISA cap still stands, the fact that you can easily, and sensibly, spread your money across many IFISAs is very valuable indeed for IFISA lenders.
4thWay has previously estimated that the risk of losing money overall when lending across a large number of loans in six or more 4thWay PLUS-Rated lending accounts or IFISAs is considerably closer to 0% than 1%, even during a major recession and property crash. This assumes you hold onto your loans until the last one is fully repaid, without trying to sell early. The calculations and data supporting this has only solidified further over the past few years.
The confirmation from HMRC just emphasises that we can do this easily within IFISAs. You're not required to open ordinary P2P lending accounts if you don't want to.
The most important part is whether your existing cash ISA, shares ISA and IFISA providers allow you to transfer out part of your cash, so that you can split it among several other IFISAs. More on that in our main guide on multiple IFISAs, where there's also a brief example near the end.
The author is not a lawyer or tax specialist and 4thWay’s content does not constitute advice.
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