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RateSetter Launch New Innovative Finance ISA

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RateSetter are one of the most recognised peer-to-peer lenders in the UK. Since 2010, investors have been making money through the platform by investing funds which are lent out to creditworthy borrowers. Up until today, the main way people invested through the site was via the Ratesetter Everyday Account.

Today, though, sees the launch of the RateSetter Innovative Finance ISA* which will allow investors to earn money tax-free via the site.

What Is an Innovative Finance ISA?

If you’re unsure as to what an Innovative Finance ISA is, let me take a few moments to explain.

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IFISAs were introduced by the government to allow peer-to-peer lending investors to benefit from tax-free earnings on their investments.

You can hold an Innovative Finance ISA alongside a Stocks and Shares ISA and Cash ISA. You can invest your full £20,000 annual ISA limit into the IFISA if you wish. Alternatively, you can also spread this amount across the various ISA types. Just need to be sure you don’t exceed your ISA limit.

For more info on how the Innovative Finance ISA works, check out the short video below.

How Does the RateSetter ISA Work?

The Ratesetter IFISA* works in exactly the same way as their popular Everyday Account* does except with the added benefit of tax-free earnings, so if you want to know exactly how it all works then why not take a few minutes to read our Ratesetter review. The average returns you can expect to see from the Ratesetter ISA at the time of writing are between 3.1%-5.8%. These are based on 3 month average rates of rolling and 5 year markets on 1st November 2018.

The Ratesetter ISA is also Flexible. This means you can withdraw funds and add them back during the tax year without affecting your ISA allowance.

Peer-to-peer lending is fully regulated by the Financial Conduct Authority. However, investments in the sector are not protected by the Financial Services Compensation Scheme. This means your capital could be at risk with this kind of ISA.

That being said, the Ratesetter provision fund* has to date ensured that no investor has lost money when investing with Ratesetter, as the provision fund provides a financial buffer against poorly performing loans.

An Exciting Alternative

So, if you’re looking for an alternative to a Stocks and Shares ISA or Cash ISA and you have always liked the idea of getting involved with peer to peer lending, then the new Innovative Finance ISA from RateSetter* could be a great option for you to get started.

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