Compare ​Peer to Peer ISAs

Choose the best ​P2P ISA to make the most of this year’s tax free allowance.

Investment ISAs put your capital at risk & you may get back less than you originally invested

Much Higher Risk Peer to Peer ISA (IF ISA)

from CROWD2FUND

ISA Option
Allows ISA Transfers
Interest Rate (AER) Over 15% per annum
  • Term: No fixed term amortising monthly repayments
  • Invest From: £10

Why we like it: Established in 2014, Crowd2Fund is a leading investment platform, building long-term relationships between investors and the great British businesses they invest in. Crowd2Fund was one of the first platforms to offer the Innovative Finance ISA in the UK. Invest up to £20,000 per tax year and your earnings will be tax-free. Available for new ISA investments as well as ISA transfers. Simple to open and manage your account online or via their app

Important: Peer to peer lending is not covered by the FSCS. Returns are not guaranteed and your actual returns may vary. Capital is at risk

Higher Risk Peer to Peer ISA (IF ISA)

from CROWD2FUND

ISA Option
Allows ISA Transfers
Interest Rate (AER) Up to 15% per annum
  • Term: No fixed term amortising monthly repayments
  • Invest From: £10

Why we like it: Established in 2014, Crowd2Fund is a leading investment platform, building long-term relationships between investors and the great British businesses they invest in. Crowd2Fund was one of the first platforms to offer the Innovative Finance ISA in the UK. Invest up to £20,000 per tax year and your earnings will be tax-free. Available for new ISA investments as well as ISA transfers. Simple to open and manage your account online or via their app

Important: Peer to peer lending is not covered by the FSCS. Returns are not guaranteed and your actual returns may vary. Capital is at risk

Medium Risk Peer to Peer ISA (IF ISA)

from CROWD2FUND

ISA Option
Allows ISA Transfers
Interest Rate (AER) Up to 14% per annum
  • Term: No fixed term amortising monthly repayments
  • Invest From: £10

Why we like it: Established in 2014, Crowd2Fund is a leading investment platform, building long-term relationships between investors and the great British businesses they invest in. Crowd2Fund was one of the first platforms to offer the Innovative Finance ISA in the UK. Invest up to £20,000 per tax year and your earnings will be tax-free. Available for new ISA investments as well as ISA transfers. Simple to open and manage your account online or via their app

Important: Peer to peer lending is not covered by the FSCS. Returns are not guaranteed and your actual returns may vary. Capital is at risk

Lower Risk Peer to Peer ISA (IF ISA)

from CROWD2FUND

ISA Option
Allows ISA Transfers
Interest Rate (AER) Up to 13% per annum
  • Term: No fixed term amortising monthly repayments
  • Invest From: £10

Why we like it: Established in 2014, Crowd2Fund is a leading investment platform, building long-term relationships between investors and the great British businesses they invest in. Crowd2Fund was one of the first platforms to offer the Innovative Finance ISA in the UK. Invest up to £20,000 per tax year and your earnings will be tax-free. Available for new ISA investments as well as ISA transfers. Simple to open and manage your account online or via their app

Important: Peer to peer lending is not covered by the FSCS. Returns are not guaranteed and your actual returns may vary. Capital is at risk

Much Lower Risk Peer to Peer ISA (IF ISA)

from CROWD2FUND

ISA Option
Allows ISA Transfers
Interest Rate (AER) Up to 12% per annum
  • Term: No fixed term amortising monthly repayments
  • Invest From: £10

Why we like it: Established in 2014, Crowd2Fund is a leading investment platform, building long-term relationships between investors and the great British businesses they invest in. Crowd2Fund was one of the first platforms to offer the Innovative Finance ISA in the UK. Invest up to £20,000 per tax year and your earnings will be tax-free. Available for new ISA investments as well as ISA transfers. Simple to open and manage your account online or via their app

Important: Peer to peer lending is not covered by the FSCS. Returns are not guaranteed and your actual returns may vary. Capital is at risk

What is a Peer to Peer ISA?

A Peer to Peer (P2P) ISA is an ISA account you can hold Peer to Peer loan investments in.

They are also known as Innovative Finance ISAs or IFISAs.

The ISA wrapper protects you from paying tax on the interest that your P2P investments return, and your Peer to Peer investments have the potential to outperform standard Cash ISAs and savings accounts.

However, they come at an additional risk due to how Peer to Peer loan investments work.

How do Peer to Peer ISAs work?

Peer to Peer ISAs work in the same way as any other Peer to Peer investments, just with the added tax benefits of an ISA.

P2P investments lend your money to borrowers who pay it back with interest.

They are just like normal loans but without a bank acting as a middle man. This means you get more of the profits, but also accept more of the risk.

Peer to Peer investment products quote a target interest rate, which is the return rate they aim to meet over a specified time period.

The interest rate is not guaranteed like with a Cash ISA, but it will likely be considerably higher.

You could also lose your money if the borrowers of your P2P loan fail to repay their debts. Or, your money could be tied up for longer than you expect.

Here are some examples of the types of borrowers that your money will be lent to:

  • Individuals taking out personal loans for home improvements, medical costs or car purchases
  • Companies taking out business loans
  • Charities

What are the benefits of a Peer to Peer ISA?

  • Better interest rates than Cash ISAs and general savings accounts
  • 100% tax-free savings
  • No limit on how much you can withdraw
  • Invest up to £20,000 for the 2023 – 2024 tax year

Can you lose money with Peer to Peer lending ISAs?

Yes, you can lose money investing in Peer to Peer lending products. Your money is loaned to different borrowers who may default on their repayments or take longer than expected to pay back their debts.

Although your P2P investment provider will aim to mitigate these risks, there is no guarantee you will get back at least what you invest.

Can you make money with Peer to Peer lending?

One of the main benefits of a Peer to Peer ISA is the potential returns on offer via the interest rates.

Compared to a Cash ISA, the interest rates available are much more attractive as long as you are comfortable with the higher risks involved.

What is the best Peer to Peer ISA?

The best P2P ISA for you will depend on some of the following factors:

  • The target interest rate
  • The length of investment term
  • The risk level associated
  • The provider’s customer service ratings
  • The minimum investment amount

Are Peer to Peer ISAs Safe?

Although your underlying Peer to Peer investments can lose money, the products are regulated and authorised by the Financial Conduct Authority (FCA).

This means that Peer to Peer ISAs must abide by rules and regulations set out by the FCA and treat customers fairly.

That being said, Peer to Peer lending ISAs are not covered by the Financial Services Compensation Scheme (FSCS), like other ISAs are.

The FSCS covers investors for up to £85,000 in the event that their investment provider goes into liquidation. It doesn’t cover the underlying ISA investments, but it does cover the ISA provider should it get into trouble. This is an added level of security that Peer to Peer ISAs don’t have.

What are some alternatives to Peer to Peer ISAs?

The main alternatives to P2P lending ISAs are the other types of ISAs available, as you get the same tax benefits with all these accounts:

Cash ISAs

  • Guaranteed or variable interest rates
  • Your money cannot go down
  • Interest rates are much lower

Stocks and Shares ISAs

  • Invest in the stock market via funds, shares and other investment vehicles
  • Value can go up as well as down
  • Suits long term investments

Junior ISAs (JISAs)

  • Opened in the name of a child
  • Can be held as a Cash JISA or Stocks and Shares JISA
  • Invest up to £4,000 per child in the current tax year

Lifetime ISAs (LISAs)

  • 25% free government bonus (kept if used for a first house deposit or at age 60)
  • 25% charge for withdrawals outside of these rules
  • Can be held as a Cash LISA or Stocks and Shares LISA
  • Invest up to £4,000 per tax year

How do I open a Peer to Peer ISA account?

The easiest way to open a P2P ISA is online or via the mobile app for your P2P ISA provider. You can also open an account over the telephone or by post, and you will need to make a contribution via debit card or Direct Debit.

Frequently Asked Questions

Do Peer to Peer ISAs provide guaranteed interest rates?

P2P loan investments provide a target interest rate and don’t guarantee a specific rate of return.

Your investment comes with the risk that the interest rates could be lower, and you could even get back less than you originally invest.

Are P2P ISAs high risk?

Peer to Peer lending ISAs are classed as high-risk investments as you could lose 100% of your money if your loan performs very badly. If the borrowers on the other side of your loan miss their repayments, then it will affect your investment.

Can I withdraw from a Peer to Peer ISA?

Yes, you can withdraw from a P2P ISA at any time but you will need to liquidate your P2P investments before you do so.

How long do withdrawals from P2P lending ISAs take?

Most withdrawals take no longer than 30 days assuming your loan is doing well. However, you should prepare for the possibility that a withdrawal could take longer than this.

How much money can I put into a P2P ISA?

You can add up to £20,000 to a Peer to Peer ISA in the 2024/25 tax year, up until the deadline of 5th April 2024. At this point, your allowance refreshes for the new tax year.

Do I pay tax when I withdraw from a Peer to Peer ISA?

No, your withdrawals are completely tax-free from a P2P ISA.