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Tax-Free Crypto: IFISA Becomes Sole Option
25 Mar
Summary
- Innovative Finance Isas will soon be the only Isa for crypto investing.
- Crypto ETNs move to IFIsas after this tax year ends.
- IFIsas are high-risk and not covered by the FSCS compensation scheme.
The Innovative Finance Isa (IFIsa) is set to become the exclusive Isa wrapper for tax-free cryptocurrency investments. As of April 6, investors can only hold major cryptocurrencies like Bitcoin and Ethereum via an IFIsa. Previously, crypto exchange-traded notes (ETNs) were permissible in stocks and shares Isas, but they will transition to IFIsas at the end of the current tax year.
Currently, no UK platform is equipped to offer both IFIsas and crypto ETNs, presenting a challenge for investors. The IFIsa, originally designed for peer-to-peer lending, requires investors to lend money to businesses or projects, with returns typically ranging from 4% to 8%. However, these returns are not guaranteed.
Crucially, IFIsas carry significant risks as they are not protected by the Financial Services Compensation Scheme (FSCS). Investors could lose their entire stake if the platform or borrower defaults, unlike cash Isas which offer protection up to £120,000.
