Re-investment of P2P funds in IF ISA

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josephryanwynne
josephryanwynne Posts: 4 Newbie
in ISAs & tax-free savings
Hi All,

I have an Innovative Finance ISA with one of the p2p lenders which re-invests all repaid funds and seem to do so indefinitely. My question is does this "reinvestment" within the same ISA affect my ISA allowance for a given year?

Cash ISA products always have a fixed period after which the return on the investment ends. Being able to just leave this IF ISA rolling and re-investing forever seems much simpler and very beneficial vs a Cash ISA long term because there is no end date at which I would need to find somewhere else to save a lump sum (on top of the other regular ISA contributions) which would probably use up my allowance for the year in one go.

Thanks!

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  • soulsaver
    soulsaver Posts: 5,976 Forumite
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    You are aware that there is no FSCS protection if your P2P platform goes belly up and you lose the lot?

    I do use a P2P ISA for a portion of my investments but I have no plan to leave funds in there indefinitely.
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  • eskbanker
    eskbanker Posts: 31,066 Forumite
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    edited 5 October 2019 at 1:17PM
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    josephryanwynne wrote: »
    I have an Innovative Finance ISA with one of the p2p lenders which re-invests all repaid funds and seem to do so indefinitely. My question is does this "reinvestment" within the same ISA affect my ISA allowance for a given year?
    No, it doesn't affect your annual ISA contribution allowance, which is all about money moving from outside the ISA shelter to inside.

    Same for reinvesting dividends within a S&S ISA or compounding interest in a cash ISA....

    Edit: on reflection it's probably more analogous to selling and (re)purchasing investments within a S&S ISA but ultimately the same answer, activity within the ISA shelter doesn't count towards the annual contribution allowance.
  • josephryanwynne
    josephryanwynne Posts: 4 Newbie
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    You are aware that there is no FSCS protection if your P2P platform goes belly up and you lose the lot?
    Thanks for the reminder! I am aware, and I am looking at other alternatives too. My query is mostly to understand whether I can continue to leave cash in there getting automatically re-invested but also use up my ISA allowance investing in a different (and yes ideally more secure) ISA.
    ...activity within the ISA shelter doesn't count towards the annual contribution allowance....
    This sounds like what I wanted to hear.

    Thanks for the replies! Both useful!
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