What is an Innovative Finance ISA?
The ISA is a Government initiative to encourage individuals to save and invest. In previous years you could put up to £15,240 per year across either a Cash ISA to earn interest and/or a Stocks & Shares ISA to invest in shares and bonds in listed companies. Any returns earned from your Cash ISA or Stocks & Shares ISA are tax free.
This year, the Government has introduced a third type of ISA called the Innovative Finance ISA (IF ISA). This type of ISA works in a similar way to a Stocks & Shares ISA but allows you to hold a range of alternative finance products in a tax free wrapper that keeps any returns you receive free of tax.
Do I get interest on the cash I subscribe into my ISA?
No, we do not pay interest on deposits in an Abundance ISA. You must make sure you invest your cash into projects in order for it to earn a return.
We did run an initial promotion when the Abundance ISA first launched which offered a return of 2% AER on cash deposited in your Abundance ISA until 1 November 2016 which has now ended. As of 1 November 2016 you will not receive any return on cash held in your Abundance ISA until it is invested into a project.
What is the ISA allowance?
You can subscribe £15,240 into your ISA in the 2016/2017 tax year. You can put your whole allowance into a particular type of ISA or you can split it up between the three different types of ISA; Cash, Stocks & Shares and Innovative Finance. You can subscribe money to your Abundance ISA by debit card or bank transfer.
Who can open an Abundance ISA?
You can open an Abundance ISA if you are resident in the UK for tax purposes and are over 18.
Can I transfer my Cash ISA or Stocks and Shares ISA?
Yes, you can transfer cash from your current year Cash or Stocks & Shares ISA across to an Innovative Finance ISA (we do not accept transfers of investments). You can also transfer all or part of your previous year’s ISA money to an IF ISA (some ISA providers may not offer a partial transfer and there may be charges or costs such as manager’s charges or lost interest) in transferring from your present ISA.
If you want to transfer money into an Abundance ISA, complete our transfer form and return it to us and we will request the transfer from your existing provider.
Can I transfer my existing investments with Abundance into an IF ISA?
We expect that there will be a way of transferring your existing Debentures into your Abundance ISA. We are working on this at the moment and will update investors when this becomes possible.
Can I have more than one type of ISA?
Yes, you can have an Innovative Finance ISA as well as a Cash and a Stocks & Shares ISA.
Can I have more than one IF ISA?
You can only subscribe to one of each type of ISA in the current tax year, but if you are transferring in money from previous ISA years and not subscribing, you can have more than one IF ISA.
So, if you open an IF ISA for 2016/2017 and put in some of your £15,240 allowance, you cannot subscribe new money to another IF ISA that year unless you transfer and close your current IF ISA. If you just want to move across money you have in an ISA from previous tax years, either in a Cash or Stocks & Shares ISA, and don’t want to use your current year’s allowance, you can open different IF ISAs with different providers to receive the transfers.
Can I transfer my Abundance ISA?
Yes, you can transfer your Abundance ISA to another IF ISA or to another type of ISA. You can only transfer cash, not Debentures, so if you have invested in Debentures you will need to sell your Debentures through the Bulletin Board before requesting the transfer from your new ISA provider. Please note that some ISA providers may charge for making transfers between ISAs.
What is a flexible ISA?
Starting from this tax year 2016/2017 ISA providers can offer flexible ISAs. A flexible ISA allows you to withdraw money from your ISA (Cash, Stocks & Shares or Innovative Finance ISA) and put it back in later in the year without losing any of your allowance. This means you can withdraw money from your ISA and then any subsequent subscriptions you make in the same tax year that would previously have counted towards your ISA allowance will now only do so once you have fully replaced the amount you withdrew.
For example, if you subscribed £5,000 into your IF ISA on the 7 April (reducing your remaining allowance to £10,240) and then withdraw £2,000 on 10 May, you could subscribe up to a further £2,000 without it reducing your annual allowance. If you were to then subscribe an additional £1,000 on 12 June, your annual allowance would reduce to £9,240. You must return the £2,000 to your ISA before the end of the tax year. If you return the money in the new tax year, it would count towards your next year’s annual allowance.
You can also withdraw money that you subscribed to your ISA in a previous tax and return it without losing its tax protected status, as long as you return it in the same tax year. For example, if you have an ISA value of £50,000 that you have been building up over the years, you can withdraw up to £50,000 and then return the money to your ISA without it counting towards your allowance, as long as it is returned in the same tax year.
The Abundance IF ISA is a flexible ISA so you have the flexibility to take out and return any uninvested cash if you need to within a tax year.
What happens to my ISA if I die?
If you die your surviving spouse (including civil partner) is allowed to make an additional permitted subscription (APS) above their personal ISA allowance, up to the value of your ISA at the time of your death.
The Abundance ISA does accept additional permitted subscriptions under these circumstances. Please contact us if you would like further information about additional permitted subscriptions.