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. |
P2P INSIDER
Supercharge your understanding of Peer to Peer investing todayThere 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. |