Investors that open a RateSetter IF ISA will be able to choose from four products, with terms ranging from one month to five years.
Investors can accept the interest rate set in the markets, or choose to set their own rate. Additionally, there will be no management fees for investors.
The four products (and their rates at the time of writing) are:
- One month term (2.8%)
- One year term (3.8%)
- Three year term (4.3%)
- Five year term (5.7%)
The RateSetter Innovative Finance ISA will operate in the same way as existing RateSetter accounts. It will be available to new and existing customers, and the standard ISA allowance of £15,240 per tax year will apply.
IF ISA rules also allow for transfers from existing cash and stocks and shares ISAs, meaning people who hold existing ISAs can transfer them into an IF ISA, while retaining their tax-free status.
The IF ISA will not be covered by the Financial Services Compensation Scheme, but in common with other RateSetter investments it will be protected by the Provision Fund.
Rhydian Lewis, CEO at RateSetter, commented:
“The launch of the IF ISA will provide a massive boost for investors - we calculate that existing investors could save as much as £376 in tax per year if they are higher rate taxpayers. And given the potential for significantly better rates on offer, it’s no wonder that one in four cash ISA holders say they are considering opening an Innovative Finance ISA.
“We’ve had strong interest from both existing and new investors so it’s great to be able to start to reveal the detail of the product – we’ll have more details over the coming weeks as we get closer to the launch.”
