Modern Finance ISA (IFISA) supplier Folk2Folk has written an open letter to Chancellor Rachel Reeves, urging the federal government to make sure that the tax wrapper will not be missed.
As the top of the tax 12 months approaches, the UK peer-to-peer lending platform has highlighted the function that the wrapper round P2P investments can play in supporting personal funding into UK companies.
Folk2Folk, which gives SME loans backed by land or property, famous latest proposals to alter the ISA panorama, which might lead to combining money ISAs and shares and shares ISAs or lowering money ISA limits.
Learn extra: UK property presents nice alternatives for fixed-income traders in 2025
Nevertheless, the agency mentioned that this dialog has “missed” the IFISA.
“Since their introduction in 2016, IFISAs have offered a tax-free means for traders to lend on to UK companies, supporting SMEs that are very important to the UK economic system,” mentioned the letter, which was signed by Folk2Folk chairman Tim Sawyer.
“In contrast to shares and shares ISAs, which spend money on publicly listed corporations, IFISAs present capital to privately owned companies.
“Though IFISAs might not be appropriate for each investor, their regular adoption demonstrates sturdy demand for tax-free, fixed-income alternatives. With a spread of suppliers providing IFISAs at completely different entry ranges, these investments serve a broad spectrum of traders. Funding in IFISAs rose 46 per cent year-on-year from £563m in 2022 to £821m in 2023, in keeping with the newest HMRC knowledge, reflecting rising investor urge for food for different, tax-free funding choices that supply fastened revenue fairly than market-dependent returns.”
Learn extra: Methods to spend money on an IFISA in 2025
Buyers ought to have entry to a various vary of tax-free funding choices, together with the IFISA that presents a possibility outdoors of conventional money and fairness merchandise, the letter mentioned.
“At Folk2Folk, now we have seen first-hand how IFISA investments assist the expansion of UK companies whereas offering traders with month-to-month, tax-free revenue,” Sawyer mentioned. “In mild of ongoing ISA coverage discussions, we urge policymakers to recognise IFISAs as an important a part of the ISA panorama and guarantee they’re included alongside money ISAs and shares and shares ISAs in client training efforts.
Learn extra: Folk2Folk IFISA to stay P2P centered
“Making certain traders are totally knowledgeable about all tax-free funding alternatives, their distinct roles, and related dangers will assist preserve a various, accessible, and efficient financial savings and funding panorama.”
