Islamic P2P financier Nester has launched an Innovative Finance Individual Savings Account (IFISA), the first to do so in the UK under a newly changed law which leveled the playing field for Shariah platforms.
IFISA is a type of tax-free ISA allowing investors to earn tax-free returns on P2P financing, crowdfunding investments and other alternative finance products. Unlike traditional cash and stocks and shares ISAs, IFISAs provides investors with direct exposure to financing or investment opportunities that match buyers seeking funding with investors.
Prior to the change in legislation last month, tax breaks were only granted to conventional ISAs with a P2P component, and not to their Shariah compliant counterparts, therefore restraining Islamic P2Ps from offering Shariah compliant P2P ISAs.
Nester, along with legal firm Foot Anstey, lobbied for amendments to the ISA Regulations last year. The latest change allows tax-fee ISAs to be used on Islamic P2P financier’s secured fixed income products.
Founded in 2018, Nester provides Shariah compliant senior financing – in the form of buy-to-let, refurbishment and bridge financing – to commercial SMEs in the property sector, which is then broken up into GBP1,000s (US$1,262.44) and sold down to retail consumers.