The Bramdean Innovative Finance ISA
It is also possible to hold loans made to UK SMEs in an ISA wrapper. This type of ISA is called the Innovative Finance ISA. Investors receive income from their loans free of tax. The target yield is 8% and Bramdean takes an annual fee of 1% giving a net return of 7%. Given that interest rates are currently 0.1% and there is little prospect of them increasing in the foreseeable future, we believe that a net yield of 7% free of tax is very attractive.