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Re-investment of P2P funds in IF ISA

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!

Comments

  • soulsaver
    soulsaver Posts: 6,927 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    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: 40,002 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    edited 5 October 2019 at 12:17PM
    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
    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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