P2P ISA

There are at least some platforms where the seller gets nothing other than par however much the interest rate has moved in their favour. Zopa comes to mind, where all gains are to the benefit of the buyer (and Zopa due to rate guarantees at times) and all losses are borne by the seller compelled to match rates through a capital loss if rates have increased. In practice P2P secondary market rates don't seem to be very sensitive to moderate changes in bond interest rates so par doesn't look like an unreasonable value to me. Though I would hardly object to the lower than par price that the anticipated higher Bank Rate would imply.

Whether HMRC would accept such at par transfers is of course something for HMRC to decide.

Does anyone know if you are going to be able to TRANSFER your current cash and S&S ISA's into a P2P ISA?

I have money in S&S ISA earning a pittance and wondering whether to take it out and invest in P2P now, but lose the amount built up in my ISA for a transfer? I'll wait till April if I can simply transfer it as then I have a bigger pot in an ISA. 

Total speculation on my part but I guess the larger sites (RS, z, w) will do this and their rates will fall through the floor as a consequence. Of course, earning 20%~45% more means your return might still be higher after tax!

The other key factor will be the marketing. Bigger sites will use the ISA a lot. This should increase visibility of them and to a lesser extent p2p in general, so the number of lenders will also increase.

i suspect rates in April to June 2016 could be very, very different from this year.

The 2015 Autumn Statement contained some more news about what can be included in the Innovative Finance ISA:

"3.33  ISAs: qualifying investments – The list of qualifying investments for the new Innovative Finance ISA will be extended in Autumn 2016 to include debt securities offered via  crowdfunding platforms. The government will continue to explore the case for extending the list  to include equity crowdfunding."

and HMRC offered further guidance in its crowdfunding consultation response:

"2.1 This Chapter summarises the main points raised in response to the consultation questions and  sets out the government’s response. The key decisions that the government has taken are to:

o extend the list of investments eligible for the Innovative Finance ISA to include debt securities issued by companies and offered via a crowdfunding platform
o commit to further work with the crowdfunding sector and other interested parties to further explore the case for including equity crowdfunding within ISAs
...
3.2 The government believes there is a strong case for allowing crowdfunded debt securities issued by companies to be held in ISAs. This will provide ISA holders with greater choice over how to invest and will support the crowdfunding sector to continue to grow as a source of alternative finance for businesses. The government will therefore legislate in autumn 2016 to allow certain debt securities issued by companies and offered via a crowdfunding platform to be held in the new Innovative Finance ISA, which will be available for certain peer-to-peer loans from 6 April 2016."

While it is not clearly stated there, the plan is to include bonds and mini-bonds that are tradeable but exclude those that are not tradeable, which would bar most of the normal mini-bonds. The tradeability requirement presumably comes because it has to be possible to exit an ISA investment in some way. Altfi mentions:

"various bond (and mini-bond) offerings are in. Such products are purveyed by the likes of UK Bond Network, Wellesley & Co. (see the Wellesley Mini-Bond) and Abundance. The mini-bonds that we've seen popping up on some equity crowdfunding sites have not been included, as these are non-transferable"

As you may know, the April 2016 plan is to allow only 36H P2P within the Innovative Finance ISA, not the whole of loan-based P2P. 36H agreements are those directly between a lender and a borrower, not where a platform lends then borrows itself from lenders to fund its own lending. Prefunding then selling to investors with a direct contract then established between lender and borrower could be 36H, or at least apparently so.

The plans to take actions in August may indicate that platforms that do not currently operate in a 36H compliant way may have another track for getting included within the Innovative Finance ISA eventually.

It's rather late at this point but if your preferred P2P platform is not clearly 36H you might want to be asking them if or how they qualify for inclusion in the IF ISA so that you and others can know whether to expect them to be available that way and they can consider any changes that might be needed if they do wish to qualify.

Once in a P2P ISA it seems like it may be hard to transfer to another platform if only a full transfer is accepted. As the some funds will often be tied up.

Yes. 

I see Funding Tree are on the latest list of approved ISA providers. Must be the first P2P platform (cant see any others). Shame they dont actually seem to have anything to invest in.