How to open a peer to peer ISA

An Innovative Finance ISA (IFISA) lets you earn tax-free interest by lending through a peer-to-peer platform. Before anything else: this is a high-risk investment. Your capital is at risk, it is not FSCS-protected, and you may not be able to withdraw quickly. Only proceed with money you can afford to lose.

Who can open one

Anyone aged 18 or over who is a UK taxpayer can open an IFISA with an FCA-regulated provider. You can open one new IFISA per tax year, though you can transfer older ISA money in.

Step by step

• 1. Compare providers: see our comparison, focusing on security, risk and how defaults are handled.
• 2. Read the Key Investor Information and the provider's wind-down plan.
• 3. Register and verify your identity: you'll need ID and your National Insurance number.
• 4. Complete the appropriateness test: providers must check you understand the risks (this is a good thing).
• 5. Fund the account: note the minimum investment (often £1,000+).
• 6. Choose self-select or auto-invest, and diversify across many loans rather than one.

What to check before you lend

• What loans are secured against, and the realistic recovery if a borrower defaults.
• The platform's track record, default rate and how long it has operated.
• How and when you can access your money, and whether there's a secondary market.