What is an Innovative Finance ISA (IFISA)?

The Innovative Finance ISA (IFISA) - introduced to the ISA family in April 2016 - is an account benefited by a tax wrapper that allows investors to hold peer-to-peer (P2P) loans and debt-based securities while earning tax-free returns.

The UK government launched the IFISA as a means of strengthening and accelerating the UK's booming alternative finance market.


Download the Innovative Finance ISA guide here.


Before the introduction of the IFISA, P2P loans and debt-based securities could not be held within any type of ISA, and investors were required to declare any income from P2P investments to the tax-man.

Since IFISAs have been available, investors have had the opportunity to use their annual IFISA allowance to invest in two high level areas, with any returns realised tax-free;

1. A peer-to-peer (P2P) loan is a loan made from an individual lender to consumers, and more recently, SMEs. P2P loans offer better rates for borrowers than are offered through traditional financing from banks, and better returns for lenders with target interest rates upwards of 6%.

2. A debt-based security is an asset-backed investment opportunity, and they include residential property developments and green energy projects. Providing interest rates that are typically in the region of 4-9.5%, they could be considered a more sturctured alternative to P2P lending. 

Importantly, IFISAs are an investment product - not a savings product, like a Cash ISA - and they have a medium–high risk profile, though the exact risk profile of an IFISA will be determined by its underlying asset

You can read about the key IFISA rules here, but the below offers an overview of the key features of an IFISA;

Annual subscription limit
£20,000 (2023/24)
Underlying assets
Peer-to-peer loans (SME, consumer)

Debt-based securities (property, green energy)
Risk profile
Estimated returns
4–9.5% (targeted)
Key benefits
Potential for greater returns than a Cash ISA, with less volatility than a Stocks and Shares ISA

Asset-backed options can offer additional security

Clear choice over what you invest into



CARLTON Bonds are an IFISA provider specialising in fixed term property bonds.

Against a backdrop of low interest rates and a volatile stock market, the IFISA can provide an attractive investment opportunity for experienced investors. 

With the ability to hold peer-to-peer loans and debt-based securities, IFISA investments have the potential to generate higher rates of return than more traditional investment routes for investors with a greater appetite for risk.

To find out more, download our free IFISA guide.

The Innovative Finance ISA Guide