ISA qualifying investments - Crowdfunded debt securities included but not equity investments for now…

The government has confirmed that crowdfunded debt securities will be eligible for inclusion within Individual Savings Accounts (ISAs). This decision follows the consultation which considered whether debt securities and equity investments offered via crowdfunding platforms should be included in the list of ISA-eligible investments.

The government believes that including debt securities within ISAs will provide ISA holders with greater choice over how to invest, will support the crowdfunding sector in continuing to grow as an alternative source of finance for businesses and will help plug the funding gap left by traditional financiers. Draft legislation implementing this change will be published for consultation. The government wish to legislate in autumn 2016 so that debt securities issued by companies and offered via a crowdfunding platform can be held in the new Innovative Finance ISA.

The government is not, however, convinced that there is a strong enough case at present to include equity investments within ISAs for now. It has however committed to work with the crowdfunding sector and other interested parties to further explore the case for inclusion.

The Innovative Finance ISA which will now be available for peer-to-peer loans and debt securities offered via crowdfunding is a step in the right direction for both borrowers wishing to access alternative non-bank finance and individual investor lenders wishing to access this market in a tax efficient manner and create a more diversified portfolio of investments.