Folk2Folk, the UK’s largest peer-to-peer lending platform, has reported a surge in transfers from low-yielding cash ISAs into its Innovative Finance ISA (IFISA).
During the 2024/25 tax year, cash ISA transfers accounted for over 73 per cent of all ISA transfers to the platform, an increase on the previous year, with the remainder coming from stocks and shares ISAs.
This increase comes amid a wider public discussion around cash ISA reform and the growing visibility of alternatives like IFISAs – the tax wrapper around peer-to-peer lending investments.
Read more: Folk2Folk posts 43pc rise in profit and record turnover
So far in the 2025/26 tax year, 100 per cent of ISA transfers to Folk2Folk’s IFISA have come from cash ISAs.
“In a year where investor caution has been high and inflation has eaten away at savings, we’ve seen more people making an active choice to move away from cash ISAs, seeking opportunities that can outpace inflation and deliver income,” said Roy Warren (pictured), managing director of Folk2Folk.
“Our IFISA offers fixed monthly interest, backed by property and is a clear alternative to leaving cash sitting dormant. And it funnels private capital directly into growing British businesses, which is something the government wants to see.”
Folk2Folk recently wrote an open letter to the UK Chancellor Rachel Reeves, calling for greater awareness of the FISA and its benefits for both investors and the UK economy.
Folk2Folk’s IFISA has now attracted nearly £77m of investment. In the first month of the 2025/26 tax year, Folk2Folk recorded its strongest monthly level of ISA inflows, receiving more than £4m in new funds.
While ISA activity traditionally peaks in March, Folk2Folk said that this post-deadline surge suggests momentum is carrying into the new financial year as its IFISA is increasingly seen as a year-round income strategy.
Read more: IFISAs offer steady returns amid stock market turmoil
Folk2Folk’s IFISA enables individuals to lend directly to UK businesses via secured loans backed by land or property. Investors earn fixed monthly interest from 8.75 per cent per annum, with no fees and a minimum investment of £20,000.
Folk2Folk has lent over £764m to small businesses across regional and rural Britain since inception in 2013.
