Earlier this week, online lending platform Zopa announced that users may now set their repayments to automatically move into an ISA. The lender reported this means that users may gradually move their Zopa money into an ISA without having to sell loans and pay fees associated with the process.
“Moving your repayments from your non-ISA products into an ISA like this will contribute to your annual allowance. This is because you’re moving money into your ISA from another account – what’s called ‘new money’ in the world of ISAs. It’s the equivalent of setting up a standing order from a current account into an ISA from the same bank. Once your money is in the ISA and has been lent out, those repayments won’t contribute to your ISA allowance. This is because you’re effectively recycling the money that you’ve already contributed into your ISA. And of course, any interest you earn will be tax-free.”
Zopa noted that users just need to open an ISA on the platform to begin setting changes. The steps to repayment settings are the following:
- Log into a Zopa account
- On the investment Summary page, find and click the “Change repayments” button just above the holding account
- On the next page, select “Move to ISA”, then click “Next”
- Select where users want their money to go if they reach their annual allowance or the tax year ends
Zopa then revealed that the ISA allowance for this tax year (2017/18) is £20,000. This can be put into one ISA, or spread across different types of ISA, but can’t be exceeded during this tax year. The online lender noted that it can only see how much the user has in their Zopa ISA.