Cash ISA Limits Are Changing: Is It Time to Explore IFISAs?
The government’s decision at the recent Budget to reduce the annual Cash ISA allowance for under-65s from £20,000 to £12,000 from April 2027 has sparked debate across the savings and investments landscape.
While the overall ISA allowance remains £20,000, this reform is intended to nudge savers to allocate a greater share to investment products – such as Stocks & Shares ISAs or Innovative Finance ISAs (IFISAs) – on the basis that the returns are typically better, and that investments provide a boost for the economy. The key question is: will habitual savers actually become investors – and, if so, what form will that take?
What savers tell us
Evidence suggests, currently, many savers would not change course. A recent KPMG study found 87% of cash ISA holders would not move into investment products even if the Cash ISA limit were reduced, instead opting for non-ISA savings or current accounts. In other words, policy alone rarely overturns entrenched savings habits.
This matters because, as mentioned, the government’s ISA reforms explicitly aim to cultivate a stronger retail investing culture. However, it seems that without an effort to provide practical guidance and confidence-building, the shift from saving (such as Cash ISAs) to investing (including Stocks & Shares ISAs and IFISAs) may be limited.
Where an IFISA can fit in
For savers who are willing and able to take a measured step toward investing, IFISAs can play a constructive role. For those comfortable with a higher level of risk, an Innovative Finance ISA (IFISA) can provide an alternative way to earn tax-free returns. Through CapitalRise’s IFISA, eligible investors can access loans secured against prime UK property via our online platform.
It is important to understand that an IFISA is fundamentally different to a Cash ISA. The latter offer capital protection and are covered by the Financial Services Compensation Scheme (FSCS). IFISAs, by contrast, involve significantly greater risk: your capital is at risk, investments are not FSCS-protected, and returns are not guaranteed. Investors should only allocate funds they can afford to lose and carefully assess each investment opportunity’s risk profile, term, and other details before committing.
About CapitalRise’s IFISA
Founded in 2016 by experienced property developers, CapitalRise opens the door to prime real estate-backed investments, opportunities that were once reserved for those with millions to invest.
With CapitalRise, these opportunities are now accessible to all eligible investors from just £1,000. Our Innovative Finance ISA allows you to invest in our opportunities whilst taking advantage of your personal tax-free allowance.*
Please note: CapitalRise does not provide tax or financial advice and encourages investors to seek advice from an independent financial adviser. Tax rules and allowances are dependent on individual circumstances and may change in the future. Investing through an ISA wrapper does not guarantee repayment of an investment.
*Tax rules and allowances depend on your circumstances and may change. Investing through an ISA wrapper does not guarantee repayment of an investment.
