Holding Bonds and Loan Notes in an IFISA

While borrower payments under a P2P loan must be made via the loan manager (or their nominee), it is possible for issuers of Loan Notes and Bonds to make payments directly to the investor. It should be noted that doing this would remove any interest paid in this way from the tax wrapper.  

For any interest paid directly (rather than into the investors IFISA account)

•  The interest is taxable
• Unless the maximum term of the investment is under one year, the issuer is required to deduct tax at the basic rate of income tax (currently 20%).