Use it or lose it!

The 2019/20 ISA deadline is less than 72 hours away. But have you decided which type of ISA you’re going to put your £20k tax-free allowance into?

Before we get into ISAs though, let’s just quickly remind ourselves of what’s been going on over the past few weeks, which may influence your decision.

The COVID-19 virus is bullying everything that stands in its way, and the damage its caused to the global stock market is no exception.

Global travel has been decimated. Many countries are in lockdown. Oil prices have sunk like the proverbial stone, and investors, around the world, have been flapping their arms causing a tidal wave of panic and wiping hundreds of billions off share values.

Consequently, The Bank of England has slashed interest rates to a record low of 0.1% in an attempt to lessen the cash flow stranglehold on UK businesses.

So how will this eye-watering chain of events affect your 2019/20 ISA allowance?

Well, it changes a lot of things so please pay attention. Let’s review your main options.

Cash ISAs

Cash ISAs are essentially regular savings accounts that allow you to earn tax-free interest. As with all ISAs, there’s a maximum allowance of £20,000 that you can invest each year.

Historically, cash ISAs have performed pretty poorly over recent years and now that the UK base rate has plummeted to a pitiful 0.1%, cash ISA returns are going to get even worse. Furthermore, when you consider inflation, a cash ISA could even be losing you money!


Stocks & Shares ISAs

When you invest in a stocks and shares ISA, your funds are diversified across many different investments including individual stocks and shares, investment funds and government and corporate bonds. But with the FTSE 100, the S&P 500 and every other stock market on its knees, would you want to put your money anywhere near a stock market until things start to recover? Further falls may well happen over the coming weeks.

Innovative Finance ISAs

Now, wouldn’t it be great if you could invest your allowance into an ISA that to some extent is removed free from all this global uncertainty.

Well, you can.

Innovative Finance ISAs are property-backed which means your investment is secured against good old bricks and mortar, avoiding any stock market volatility and The Bank of England’s feeble base rate. What’s more, you can earn up to an impressive 7% p.a. on your investment tax-free.

Yes, the property market is affected by the pandemic, but the underlying fundamentals are still in place. People will still have jobs and will still need housing in a few months when this is over and pent up demand and inflation caused by cutting interest rates, massive public spending and more quantitative easing may well lead to increases in house prices.   

There are 21.2 million adult ISA holders in the UK and at the end of 2017/18 the market value of adult ISA holdings was over £600 billion.

Cash ISA holdings account for 44% of the total amount, whilst stocks & shares ISAs account for 55% of the market value.

Investment in Innovative Finance ISAs has now exceeded £1 billion as more people learn of their benefits.


The top 3-year fixed rate cash ISA in the current 2019/20 tax year is 1.7%. The House Crowd’s property-backed ISA has target returns of 7% p.a. That’s a whopping 4.1 times more than a cash ISA.

So, don’t delay, use your ISA allowance today! If you don’t, you’ll lose this year’s allowance! There’s no rolling over to the next tax year!

If you’d like to learn more about Innovative Finance ISAs and how they could play integral part in your overall investment portfolio this year, download our free copy of our 2020 ISA guide.