If you’re exploring how to invest in peer-to-peer lending, opening an account with Loanpad is one of the simplest ways to get started. Loanpad is one of the most established P2P lending platforms in the UK, and the premise is simple: open an account, add your funds and Loanpad will automatically spread your investment across a variety of property-backed loans, which will accrue interest daily.
Depending on the type of account you choose, you can either access your money instantly or by giving Loanpad 60 days notice. All accounts are eligible to be held within an Innovative Finance ISA (IFISA) which means that any returns are protected from taxation.
These are the benefits of opening a Loanpad account, but before you go any further it is important to be equally aware of the risks. P2P lending is not protected under the Financial Services Compensation Scheme (FSCS) so if you lose money you may not be able to recoup it. Capital loss is the key risk of any P2P lending platform – in the event of a borrower default, there is a chance that investor capital could remain unpaid.
Loanpad takes this risk very seriously and carries out strict due diligence on every borrower, as well as insisting upon collateral underpinning every loan. This means that if the borrower defaults on a loan, the collateral can be sold to pay investors. Loanpad also offers loans with very conservative loan-to-values, which further reduces the risk to investors. Due to these measures, not a single Loanpad investor has lost a penny of their capital to date. However, it is important to note that past performance is no guarantee of future success. We encourage all investors to do their own research before committing any funds.
How to Invest in Peer-to-Peer Lending With Loanpad: 5 Simple Steps
Once you have done your research and determined that you want to invest in peer-to-peer lending with Loanpad, the process is very simple.
- Register as a new user
This involves filing out a simple form here. To open an account you must be at least 18 years old, and hold a UK bank account. During the onboarding process you will be asked which account you want to choose. For retail investors, a personal account is the most appropriate option, unless you are using your Loanpad investments as part of a personal pension plan, in which case you may wish to choose our SSAS account. If you have any questions about which account is most suitable for you, contact us at support@loanpad.com.
- Complete an appropriateness test
By law, all new P2P investors have to complete an appropriateness test to prove that they understand the risks involved with this type of alternative investment. This test should only take a few minutes and you will receive an immediate pass or fail decision. At this stage, Loanpad will also carry out identity and anti-money laundering checks which could involve requests for photo ID or other supporting documents.
- Add funds
Once you have passed the appropriateness test, you can start adding funds to your account. At this stage it is important to decide whether you want to invest in our Classic Account, which offers daily liquidity, or our Premium Account, which offers slightly higher returns but requires 60 days notice before any withdrawals are made. If you are a UK taxpayer, you can also choose an IFISA version of either of these accounts, which will ensure that any returns will remain tax free.
- Invest
When you are ready to invest, Loanpad will spread all of your invested funds across any eligible live loans on the platform. Interest is paid daily into your Loanpad cash account, where it can be withdrawn or reinvested.
- Monitor your portfolio
Your online dashboard allows you to review your balance, interest and underlying loan portfolio. Pay attention to any changes in interest rates, loan performance, withdrawal conditions and risk disclosures, and make use of the Loanpad chatbot or contact support@loanpad.com if you are confused about anything or have any other questions.
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Loanpad is paying its first dividend to investors, of £1.50 per share on 1 July 2026.
This payment marks the latest milestone for our firm, and represents a chance to say thank you to our backers. We would like to extend a particular thanks to all of our shareholders including those from the Seedrs platform.
“We are proud to announce the payment of a £1.50 per share dividend to everyone who has backed our business with an equity investment” said Neil Maurice, chief operating and financial officer at Loanpad.
“Our business has gone from strength to strength since we launched in 2019. We have been profitable every year since 2022, with no corporate debt on our books. We have very intentionally scaled up sustainably, growing each year by maintaining rigorous due diligence processes and staying true to our business model.”
A successful business model
Loanpad operates as a property-backed peer-to-peer lending platform, which matches borrowers in need of funding with lenders seeking a return on their cash. We work alongside a select number of lending partners who invest alongside our individual lenders and take on the higher risk portions of every loan, effectively providing a shield to retail investors in the event of a loan default. While past performance is no guarantee of future success, to date Loanpad’s retail investors have not lost a single penny of their capital.
We are approved and regulated by the Financial Conduct Authority (FCA), and we also function as an ISA manager, allowing all of our investors to protect their earnings from taxation by putting up to £20,000 into an Innovative Finance ISA wrapper.
Strong loan book and finances
We are also a profitable company, and we have been strengthening our financial position every year. Our financial statements can be viewed on Companies House, and show that our net assets and cash holdings have both grown substantially in recent years, while we continue to hold zero corporate debt.
“As the Loanpad platform is in its 7th year, we are exactly where we want to be,” added Maurice.
“Our finances are in great health, and our loan book is going from strength to strength. Our loanbook is currently over £138m, and we intend to grow this figure in the months and years ahead.
“Our successful growth would not have been possible without the support of our equity backers and we are delighted that we are able to reward their trust in us with this first dividend payment.”
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Loanpad continues to be profitable
Loanpad had another profitable year in 2025, continuing a profitability streak which began in 2021. According to recently-filed financial statements available to view on Companies House, Loanpad’s financial position remains strong, with no corporate debt on the firm’s books and rising net assets.
The financial disclosures show that the company’s net assets grew from £2.03m to £3.40m between the year ending 31 December 2024 and the year ending 31 December 2025.
“This strong cash generation indicates that our profits are translating into real liquidity, giving the company greater flexibility to invest, expand, or strengthen our balance sheet,” said Neil Maurice, chief operating and financial officer at Loanpad.
“Our latest annual financial statements demonstrate that the company has materially strengthened our financial position year-on-year. We have been profitable every month since July 2021, and we expect our profits to continue to increase across 2026.”
Strong business model
Loanpad was launched in 2018, offering a new way for retail investors to access the property-backed lending market. It is a Financial Conduct Authority (FCA) approved lending platform which allows retail investors to invest in collateral-backed property loans alongside a group of established property lenders, called lending partners. These lending partners take the higher risk portion of each loan in return for a higher rate of interest, effectively shielding retail investors from the majority of the risk.
While past performance is no guarantee of future success, to date Loanpad’s retail investors have not lost a single penny of their capital. This is down to the platform’s commitment to strong due diligence on every loan, as well as the low loan-to-values (LTVs) on all properties which are taken as collateral.
Over the past eight years, this business model has weathered a global pandemic, and multiple macro-economic shocks which have heaped pressure on the alternative credit market. However, Loanpad has continued to both retain and attract investors, while steadily solidifying its own financial foundations to create a robust business which now boasts a strong track record of performance.
“We are delighted to have ended 2025 in profit, a testament to the hard work of our team and the strength of our business model,” said Maurice. “Since we launched in 2018, we have been focused on building a lean business that can scale sustainably over time. Our 2025 financial results are a testament to our strong business model, and our ability to deliver for investors, borrowers and shareholders.”
More milestones
Loanpad’s investor loanbook recently surpassed £135m, reflecting strong investor demand for the platform’s products, even amid a difficult macroeconomic environment.
Furthermore, the platform continues to target competitive returns to investors with the option of daily account access, and the opportunity to shelter investments within an ISA wrapper. At the time of writing, Loanpad’s classic account was targeting returns of 4.8%, while the premium account was targeting 5.8%.
“We take great pride in our transparency,” said Maurice. “All of our lending statistics including the latest target returns can be seen on our website, and all of our financial statements can be viewed on Companies House.
“We want our investors and borrowers to feel reassured that they can check our company’s financial health and our loanbook’s performance at any time.”
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What happens if you don’t use your annual ISA allowance?
The new financial year is well underway, and that means that for every UK taxpayer the annual ISA allowance resets.
From 6 April 2026 until 5 April 2027, up to £20,000 can be saved or invested without taxation, in a Cash ISA, Stocks and Shares ISA, Junior ISA, Lifetime ISA and/or an Innovative Finance ISA. And the easiest way to maximise your ISA allowance is to start early.
Why the ISA allowance matters
The annual ISA allowance is the best opportunity for savers and investors to maximise their returns. Not only are these funds exempt from taxation, but any interest payments, dividends or returns can be reinvested tax free so that you can benefit from the effect of compound inflation. That means you can effectively earn interest on your interest, year after year, without any tax payments taken. Over time this can really add up.
However, you can only invest £20,000 until 5 April 2027. After this date, the new tax year begins and the ISA allowance resets. If you haven’t used the previous year’s allowance, you lose it.
Use it or lose it – what the catchphrase really means
ISA allowances do not roll over. Once the tax year ends on 5 April, any unused portion of your allowance is gone for good. You can’t carry it forward, and you can’t make up for it in future years by contributing more than the annual cap.
For example, if you only invest £5,000 in one tax year, you cannot contribute £35,000 the next year to compensate. You are still limited to the standard annual allowance. Over time, under-utilising your annual allowance can significantly reduce the total amount you’re able to shelter from tax, as well as causing you to lose out on the ability to compound your interest.
For example, if you consistently underuse your ISA allowance by £10,000 per year, over 10 years, that’s £100,000 that could have been growing in a tax-efficient wrapper. Depending on your investment returns, the long-term difference could be substantial, particularly if you’re investing in higher-yielding opportunities such as property-backed lending.
How to maximise your ISA allowance
The best way to make the most of your annual ISA allowance is to start allocating money as early as possible in the year. £20,000 is the equivalent of approximately £1,666 per month. If you can afford to set this aside, a direct debit or standing order can make the allocation process much easier. Just take some time at the start of the year to decide which ISA accounts to use, set up an automated monthly payment system, and you won’t have to revisit your strategy until April 2027.
Choosing the right ISA
Your annual ISA allowance can be spread across a range of ISA accounts, allowing you to diversify across stocks and shares, cash, and peer-to-peer loans. How you choose to invest will depend on your individual risk profile. If you are risk averse, you may prefer to allocate most of your funds into a Cash ISA, where yields tend to be lower but more consistent. With stocks and shares, you can choose to either hand-pick your own investments or place your money into a tracker fund. However, geopolitical risk and macroeconomic volatility tends to hit the equity markets first, so depending on the makeup of your portfolio, you could incur losses in the event of a market shock.
Innovative Finance ISAs – or IFISAs – occupy something of a middle ground. Returns are relatively consistent, and typically higher than Cash ISAs. The IFISA bracket covers off peer-to-peer loans, crowdfunding investments, open ended property funds and long-term asset funds. For P2P IFISAs such as the Loanpad IFISA, investors earn money through loan repayments from the platform’s borrowers. The key risk here is that the borrower is unable to make one or more of these repayments, and ultimately could fall into difficulty, placing investor capital at risk. However, a good IFISA manager will conduct strict due diligence on every new borrower, ensuring that only the highest quality borrowers are able to access the platform’s lenders. Loanpad also takes collateral in the form of property on every loan that it approves, ensuring that there is a way for investors to recoup their capital should the borrower default. Furthermore, Loanpad invests alongside its investors, sharing the risk.
Learn more about the Loanpad IFISA here.
| Don’t invest unless you’re prepared to lose money. This is a high-risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong. Take 2 mins to learn more. |
P2P INSIDER
Supercharge your understanding of Peer to Peer investing todayLoanpad passes £135m milestone as growth journey continues.
Loanpad’s investor loanbook has surpassed £135m, demonstrating the property-lending platform’s ability to grow organically and steadily over time.
This milestone has been reached without any capital losses to investors to date, thanks to the platform’s rigorous due diligence process and ability to originate good quality, property-backed loans.
“Since Loanpad was established eight years ago, we have remained true to our mission – to deliver competitive, risk-managed returns for our investors simply and effectively,” says Neil Maurice, chief operating and finance officer at Loanpad.
“Today we are proud to say that our investor loanbook has grown to more than £137m, with zero capital losses to date. We have managed this growth throughout a global pandemic, fluctuating interest rates, and multiple macroeconomic shocks.
“This ability to grow our platform and deliver for our investors and borrowers is a testament to the hard work of our team, and our commitment to strong due diligence throughout the lifetime of every loan.
“Our business model now has a proven track record, and we are looking towards our future growth, onboarding more lending partners and supporting more borrowers across the UK at a time when fair financing is becoming increasingly hard to find.”
A focus on disciplined growth
Loanpad was launched in 2018, with the aim of enabling retail investors to back short-term property loans in the UK. Investments are raised from a combination of a select group of lending partners, as well as Loanpad’s ever-growing pool of retail investors. Currently, our lending partners share of the loans is more than £104m, while our retail investor base has invested more than £136m. This means that our live loanbook is currently valued at more than £240m.
We believe that our phenomenal growth story is due to the diligent and conservative management of the platform, as well as the loyalty of our investor base.
In just eight years, Loanpad has become an established part of the UK’s property lending market, growing its loanbook from £10m in 2020, to £50m in 2022 and £137m today.
Transparency has always been at the heart of Loanpad’s business. We are registered with the FCA, and we report all lending statistics on our website. We don’t charge any fees to our investors, but we do make a margin on the rate of interest paid by borrowers.
We also prioritise conservative loan-to-value (LTV) ratios on all property loans, to ensure that our investor capital is protected in the event of a borrower default. As a result of these measures, not a single investor has lost a penny of their capital through Loanpad.
This approach has helped us to build a loyal community of backers who choose to keep investing with Loanpad year after year.
“We would like to thank our investor base for all of their support over the years, and for trusting us with their hard-earned money,” says Maurice. “We are here for the long term, and we intend to maintain the highest standards by choosing great loans and delivering great returns for our investors.”
| Don’t invest unless you’re prepared to lose money. This is a high-risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong. Take 2 mins to learn more. |
As the 5 April 2026 tax year deadline approaches, many UK savers and investors are reviewing their finances and deciding how best to make use of their remaining ISA allowances and other tax-efficient allowances.
This year, the annual ISA allowance 2025/2026 remains at £20,000. This means that all UK taxpayers are entitled to shelter up to £20,000 in a Cash ISA, Stocks and Shares ISA and/or an Innovative Finance ISA (IFISA) account. If you invest £10,000 before 5 April 2026, the remaining £10,000 of your ISA Allowance 2025/2026 will disappear when the new April tax year begins.
The £20,000 ISA allowance can be kept in just one account, or across a variety of different accounts to allow for portfolio diversification. For example, stock market volatility may mean that more risk-averse investors might prefer to keep a larger sum in a Cash ISA account this year, while more risk-aware investors may wish to consider an IFISA for the first time.
ISA allowance variables for the 2025/2026 tax year
Not all ISAs follow the annual £20,000 allowance rule. There are two exceptions – the Lifetime ISA (LISA) and the Junior ISA (JISA).
Up to £4,000 can be held within a LISA, but this counts towards your overall £20,000 annual ISA allowance, so if you chose to max out your LISA this year you would have just £16,000 of your remaining ISA allowance available for other ISA accounts. The LISA is unique among other ISAs as it can only be used to buy a first home or for a pension fund. Furthermore, LISA users can only pay into the account until they are 50 years old, and pension withdrawals can’t begin until the age of 60.
Meanwhile, up to £9,000 can be added to a Junior ISA during the April-to-April tax year. This money can be invested or saved on behalf of a child, and therefore it does not impact on the £20,000 annual ISA allowance that adults are subject to. In theory, you could invest £20,000 in your own ISA accounts, plus an additional £9,000 in the account of your child, effectively meaning that you are sheltering £29,000 of your income per year from unnecessary taxation.
How to use your £20,000 ISA allowance in the 2025/26 tax year
The UK government has indicated that it is interested in reforming the ISA landscape. This has already resulted in the announcement that the Cash ISA allowance will be reduced from the current £20,000 per year to £12,000 per year from April 2027. With the prospect of change ahead, this could be a good time to ensure that you are making the most of the current ISA allowance and maximising your chances of making tax-free returns.
Before deciding how to allocate your ISA allowance, it is important that you understand the difference between the three main account options.
- Cash ISAs are viewed as lower-risk, offering variable or fixed interest rates across one, two or five years, closely tied to the Bank of England base rate. If the base rate goes down, variable rate Cash ISAs may also see their interest rates reduced.
- Stocks and Shares ISAs offer a wide range of potential returns – including the possibility of negative returns, or losses. Investors can choose from hundreds of options, including equities, bonds, and alternatives, as well as tracker funds which mirror the performance of the world’s key stock markets. A financial advisor can help you to put together an ISA-eligible stocks and shares portfolio, or you can manually select your own stocks and shares if you feel confident in your ability to read the market and understand risk.
- FISAs allow investors to lend money through authorised peer-to-peer lending platforms, as well as long-term asset funds (LTAFs) and open-ended property funds, while still benefiting from the tax advantages of an ISA wrapper. For investors who are comfortable with the risks associated with lending, this can offer an attractive way to generate potentially higher yields than traditional savings accounts, without experiencing the daily fluctuations associated with the stock market.
With the annual ISA allowance, the motto is ‘use it or lose it’. Even if you are not able to invest the full £20,000, any savings and investments made within the tax wrapper can help to protect your capital and returns from unnecessary taxation, while benefiting from the effects of compound interest over time – just as long as you don’t make any unplanned withdrawals. The allowance resets on 6 April, so this is the season to spring into action and come up with an ISA strategy that will carry you through the next financial year as well.
| Don’t invest unless you’re prepared to lose money. This is a high-risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong. Take 2 mins to learn more. |
The end of the tax year is quickly approaching, with this year’s ISA deadline expiring on 5 April 2026. That means that investors and savers have just a few weeks left to decide where to keep their money before the ISA deadline, in order to avoid unnecessary taxation.
In an investment landscape shaped by persistent inflation, shifting interest rate expectations and geopolitical volatility, it can be hard to decide between the relative safety (but limited yield) of a Cash ISA, and the opportunity (but relative risk) of a Stocks and Shares ISA or an Innovative Finance ISA (IFISA).
When making a last-minute ISA choice ahead of the ISA deadline, you need to consider your broader financial objectives, whether this is tax efficiency, capital preservation, or long-term wealth generation. It is also important to be aware of the level of risk that you are comfortable with, before choosing a new investment account.
So how do you decide where to put your money before the ISA deadline arrives?
Understanding your options before the ISA deadline
All UK taxpayers have four main options when it comes to ISA accounts. These are:
- Cash ISAs – offered by most banks and building societies, with rates often fixed across one, two or five years.
- Stocks and Shares ISAs – offered by most investment platforms, with the ability to choose a bespoke or a strategic portfolio of stocks and shares, adjusted for your individual risk requirements.
- IFISAs – offered by most peer-to-peer lending platforms, crowdfunding platforms, long-term asset funds (LTAFs) and open-ended property funds, subject to investor eligibility.
- Lifetime ISAs (LISAs) – offered by some banks and investment platforms, this ISA is capped at £4,000 per year and can only be used for a first home purchase or pension, subject to investor eligibility.
For the current 2025/26 tax year, up to £20,000 can be invested in either a Cash, Stocks and Shares or Innovative Finance ISA before the ISA deadline. However, from April 2027, the Cash ISA allowance will be reduced to £12,000.
The diversity of choice in the ISA space means that you can choose to spread your annual allowance across a range of different types of saving and investing accounts before the ISA deadline. For example, you may choose to use up the entire £4,000 LISA allowance, and then divide the remaining £16,000 allowance across Cash, Stocks and Shares, and IFISAs.
It is also possible to diversify your money even further by investing in several different Cash ISA accounts, Stocks and Shares accounts and IFISAs.
But when time is of the essence, and geopolitical challenges are wreaking havoc with the global equity markets, decisive action is required.
Why consider an IFISA before the ISA deadline?
Every ISA has its place. Cash ISAs can provide capital security and liquidity, but real returns may be modest once inflation is taken into account. Stocks and Shares ISAs offer market exposure and long-term growth potential, but short-term volatility can be uncomfortable, particularly in uncertain macroeconomic conditions.
For investors who are seeking yield without full equity market exposure, the IFISA is worth a closer look.
An IFISA allows investors to earn tax-free returns by lending through FCA-regulated peer-to-peer and private credit platforms. This offers diversification away from the equity markets, and the possibility of earning fixed returns by backing British businesses and supporting the domestic property market.
The key risk with IFISAs is that one or more of the underlying loans will fall into default. This risk can never be completely eliminated, but it can be minimised through good portfolio management and the addition of collateral on all loans.
Before choosing an IFISA, do your due diligence on IFISA providers and make sure that you choose one which is FCA-registered, and has a long track record in the market. While past performance is no guarantee of future returns, it is also helpful to look at a platform’s history to get a sense of how it responds during times of economic stress, such as the Covid pandemic.
Timing is important when it comes to investing, but in a rapidly changing world with multiple stress factors hitting the market simultaneously, the priority should be to simply make smart and informed choices with your money while taking full advantage of any tax efficient benefits that are available to you. Before the ISA deadline has passed, carve out some time to look at your financial goals and shelter your cash from the tax man, ideally whilst also earning inflation-beating returns.
| Don’t invest unless you’re prepared to lose money. This is a high-risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong. Take 2 mins to learn more. |
How to choose the right ISA this tax season
The end of the ISA tax year is rapidly approaching, and both savers and investors are rushing to take advantage of their annual ISA allowance. The government recently announced plans to reduce the Cash ISA allowance from its current £20,000 to £12,000, but this change will not come into effect until next year.
In the meantime, UK taxpayers can choose to allocate up to £20,000 per year into a range of ISA products. But what is actually available?
Cash ISA
Easily the most popular type of ISA. In the 2023/24 ISA tax year, almost 10 million people held cash ISA accounts1, making them by far the most popular ISA wrappers on the market. Most banks, building societies and investment platforms now offer Cash ISA accounts, with returns closely linked with the base rate. At the time of writing, the UK’s base rate is 3.75% and the top cash ISA rate was around 4.5%2.
Cash ISAs are popular for their perceived safety – they are protected under the Financial Services Compensation Scheme (FSCS) which means that any Cash ISA loss of up to £120,000 will be protected should the Cash ISA provider fail.
However, while Cash ISAs offer a certain amount of security and predictability, the returns are relatively low. If Cash ISA returns are unable to keep pace with the rate of inflation, this means that your money loses its spending power in real time.
Stocks and Shares ISA
The second most popular type of ISA had more than four million subscribers in 2023/24. This ISA allows taxpayers to invest tax-free in assets such as shares, bonds, and funds.
Unlike a Cash ISA, the value of investments can go down as well as up, but the idea is that over the long term, a Stocks and Shares ISA may offer higher growth potential. However, if you are using this ISA to choose individual stocks and shares, you run the risk of making a loss on a bad investment. Furthermore, market volatility can drag down the value of any investment portfolio and quickly. To maximise the value of a Stocks and Shares ISA it is best to maintain a diversified portfolio of assets and to avoid falling into a day trader mindset and obsessively monitoring the market for opportunities or changes.
Lifetime ISA
This ISA is designed to help people either buy their first home or to save for their retirement. You can only open a Lifetime ISA aged 18 to 39, and you can only contribute until you are 50 years old. The government will add a 25% bonus on contributions, up to a limit.
But there are a few rules. You can only contribute up to £4,000 per year, and this £4,000 counts towards the £20,000 overall annual ISA allowance. It can only be withdrawn to purchase your first home, or to finance your retirement.
Innovative Finance ISA (IFIS
This is arguably the fastest-growing type of ISA account in the UK. The IFISA is a newer form of ISA that allows tax-free investment in peer-to-peer (P2P) lending and property-backed lending platforms such as Loanpad, and private credit-style loan products such as long-term asset funds (LTAFs).
Instead of earning interest from a bank, you earn returns from the borrowers who are repaying their loans. This ISA is popular with investors looking for income and portfolio diversificationand offers an opportunity to support home-grown entrepreneurs and property developers. The returns are typically fixed across the term of the loan and can range from 5% to 15%, depending on the platform chosen and the level of risk.
Unlike Cash ISAs, IFISAs are not protected by FSCS, and understanding the platform’s underlying loan security (such as property valuations and loan-to-value ratios) is crucial.
Junior ISA
This is an ISA for children under 18, which is managed by a parent or guardian until the child turns 18. For the 2025/26 ISA tax year it has a limit of £9,000 per year. Contributions can be made by anyone, including parents, guardians or simply well-wishers.
All of the money invested and saved in a Junior ISA belongs to the child and can’t be accessed until they are 18. This is a great option if you want to set up a nest egg for a child or shelter an inheritance from over-taxation.
Choosing an ISA
With so many types of ISA to choose from, the investing and savings space can seem daunting. But there is no reason why you can’t invest across each type of ISA structure. An ISA comparison can help you understand how different ISAs fit together within your overall strategy. Diversification is the friend of the savvy investor, and by spreading your money across a variety of different types of ISA, you may be able to protect yourself from any sudden market shocks.
The most important thing is not trying to choose the ‘perfect’ ISA – it’s about using your ISA allowance consistently and aligning your ISA strategy with your goals, timeline and risk comfort.
| Don’t invest unless you’re prepared to lose money. This is a high-risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong. Take 2 mins to learn more. |
There has been a lot of chatter about ISA reform lately, leaving many savers and investors unsure about where they stand with their ISA portfolios.
In her Autumn Statement, Chancellor Rachel Reeves announced that the Cash ISA allowance would drop from the current £20,000 to £12,000 in the 2027/28 financial year. For now, UK taxpayers can invest a total of £20,000 in ISA accounts, including Cash ISAs, Stocks and Shares ISAs, and Innovative Finance ISAs (IFISAs). Up to £4,000 can be added to a Lifetime ISA and up to £9,000 into a Junior ISA, just as long as the £20,000 annual ISA limit is not breached.
Unlike a Cash ISA where you earn interest from cash savings, IFISAs allow you to earn returns from alternative investments, most commonly peer-to-peer (P2P) loans and other forms of direct lending. For income-seeking investors, that can be appealing. But it also comes with additional complexity and risk.
In the 2025/26 tax year, IFISA rules remain broadly stable. However, recent reforms have significantly expanded what can sit inside an IFISA.
What’s different about IFISAs
The IFISA was initially created to allow UK taxpayers to invest in P2P lending and crowdfunding platforms but as of 6 April 2024, the IFISA remit was expanded to include long-term asset funds (LTAFs) and open-ended property funds for the first time.
This change was designed to enable everyday investors to access a wider variety of long-term, less-liquid asset classes within a regulated ISA framework.
In the past, IFISA investors had to choose just one IFISA to invest in per year, but this restriction has now been lifted. Investors can now hold multiple IFISAs across different providers, up to the £20,000 annual ISA allowance.
Who can invest in an IFISA
Any UK taxpayer over the age of 18 can open an IFISA with a registered IFISA provider and start investing in P2P lending, LTAFs and open-ended property funds. Up to £20,000 can be held within an IFISA each financial year, and this allowance resets on 6 April.
What are the risks?
IFISAs are tax free but they are not risk free. The key risk with IFISA investing is that if the underlying loans default, you lose your capital as well as any interest that you expected to receive. Good IFISA managers will work hard to minimise this risk, but it cannot be eliminated entirely. This is why it is so important to do your own due diligence before choosing an IFISA manager and trusting them with your money.
IFISAs are not protected by the Financial Services Compensation Scheme (FSCS) which means that in the event of a platform failure, you may not be able to recoup any money lost. For this reason, it is important to ensure that you can afford any losses associated with IFISA investing and diversify your portfolio so that you are not completely reliant on one type of ISA investment.
Why invest in an IFISA now
The ISA landscape is changing. Next year, the Cash ISA allowance will fall, reflecting a government aim to encourage more UK taxpayers to invest rather than save. Meanwhile, macro-economic and geo-political risks are primed to wreak havoc with the stock markets, sending nervous investors in search of new homes for their funds.
This means that there is likely to be an influx of new ISA investors hitting the market next year who are considering IFISAs for the first time rather than Cash ISAs or Stocks and Shares ISAs. The current tax year presents a great opportunity to get ahead of the rush and get to grips with the IFISA market so that you can maximise your tax-free allowance and make the best financial decisions with your money.
| Don’t invest unless you’re prepared to lose money. This is a high-risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong. Take 2 mins to learn more. |
With interest rates ticking lower and banks continuing to hold back on lending, both investors and borrowers are re-evaluating traditional finance options. And one of those options is property-backed peer-to-peer(P2P) lending.
As we look towards the year ahead, we expect to see property-backed P2P lending become more popular among both borrowers and investors.
For borrowers, alternative lending platforms can represent an attractive alternative to banks. Alternative lenders can make very quick decisions, and we can offer competitive terms to property developers and BTL investors who are seeking funding for their next project.
For investors, property-backed P2P lending platforms can deliver inflation-beating returns which can also be sheltered from tax within an Innovative Finance ISA (IFISA) wrapper. Furthermore, by investing in property-backed loans, investors are directly supporting the UK’s economic growth and helping to solve the ongoing housing crisis.
What is property-backed P2P lending?
Property-backed P2P lending is a form of alternative finance that allows individuals to lend money directly to borrowers through an online platform, with property used as collateral for the loan. Instead of borrowing from a traditional bank, property developers or owners raise funds from a pool of private investors, each contributing a portion of the total loan amount. Loanpad has a minimum investment threshold of just £1, as part of our commitment to make it as easy and affordable as possible for people to access property market returns.
The key feature of property-backed peer-to-peer lending is that every loan is secured against a physical asset such as a residential, commercial, or development property. This security can help to minimise the risk of capital loss for lenders because, if the borrower fails to repay, the property can be sold to recover the outstanding debt. At Loanpad, we take collateral on every loan and maintain very low loan-to-values (LTVs) to help control the risk of investor losses.
To date, we are proud to say that not a single investor has ever lost a penny of their capital with Loanpad. However, while the risk of capital loss can be managed, it is never completely removed. All investors are encouraged to do their own due diligence to ensure that they understand what they are investing in, and whether they are comfortable with the risks involved.
Why consider property-backed lending now?
The UK government has been vocal about its desire to see UK taxpayers move their money out of low-yielding savings accounts and into investments. To this end, Chancellor Rachel Reeves recently announced plans to reduce the Cash ISA allowance from £20,000 per year, to £12,000 per year. However, the £20,000 limit for Stocks & Shares ISAs and Innovative Finance ISAs remains intact. This means that UK taxpayers can continue to allocate up to £20,000 per year into IFISA-eligible investments such as property-backed lending.
In addition to this, a rash of new property tax announcements in the Autumn Statement has made it more difficult for people to build wealth by buying and selling or buying and renting residential properties. In order to earn money from the UK property market, these investors now need to think outside the box and consider investing in the sector rather than making a new property purchase.
How to choose the right peer-to peer property-lending platform
For all the reasons referenced above, we expect to see more investors considering P2P property lending in the year ahead. But the key challenge for newer P2P investors will be choosing the right platform.
Peer-to-peer property lending has been around for more than a decade, and in that time enhanced regulation and competition has separated the strongest players from the weaker ones. While past performance is no guarantee of future success, investors can now look to each individual platform’s track record to get a sense of its ability to manage risk effectively and deliver consistent returns to investors.
Property-backed P2P is collateral-backed and actively regulated, and platforms such as Loanpad have proven that they have the ability to protect investor capital even during macro-economic shocks such as the Covid-19 pandemic. 2026 could be the year that this sector takes off – just as long as investors understand the risks involved and trust the right platforms with their money.
| Don’t invest unless you’re prepared to lose money. This is a high-risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong. Take 2 mins to learn more. |