Powering the future: Use your ISA to fight climate change (Apr 15, 2024)

Is that spring in the air?

Even if the weather is now an unreliable indicator of the arrival of spring, the annual British ritual of the tax year end always heralds a new season of investing for those who want to use their annual £20,000 ISA (or Individual Savings Account) allowance.

And this year sees the introduction of greater freedoms for ISA investors to choose where and how they invest. You can now open multiple of the same type of ISA in each tax year which means you are no longer limited to using your ISA allowance across a single Innovative Finance (IF) ISA, Stocks & Shares, and Cash ISA each year. There are also changes making it easier to make partial transfers between ISAs for those who have built up a portfolio of different ISA accounts with different ISA providers.

This is great news for IF ISA investors in particular, as now you can select to open IFISAs with a number of different providers and spread your investments and your positive impact more easily.

If you have never considered the benefits of tax free saving and investment via the ISA scheme, the jargon can feel off-putting. You can find out more about the different forms of ISA accounts here.

The principle of the ISA is simple. It is a pot of savings or investments to which you can contribute up to £20,000 of new money in any single tax year. You can now have as many different pots as you wish, across the many different ISA providers and types of ISA account available.

Interest earned from savings accounts and bonds is usually subject to tax as it is a form of income, and although the government provides a “Personal Savings Allowance” which means that the first £1000 (for basic rate taxpayers) of interest is tax-free. Rising rates mean that many savers are now subject to 20% tax on their savings (or greater if they are a higher rate tax payer).

The IF ISA was created to give people who want to invest directly in projects and fund small businesses, via crowdfunding bonds for example, to benefit from the same annual tax-free investing allowance as investors in stocks and shares and savers, putting away cash in the bank for the long term.

Solar for Schools Community Benefit Society works in partnership with Ethex, the leading ethical investment crowdfunding platform, to allow investors to help schools save money, reduce their carbon and educate the next generation on sustainability and clean energy. All through bonds, holding these savings in an Innovative Finance ISA.

Just over half of the investments into the Solar for Schools Community Benefit Society are made via an IFISA with investors benefiting from returns (they have a current offer being 5.5% per annum) that are tax-free. The Ethex IFISA account also allows you to invest in the other ISA eligible investments on the Ethex platform to support a portfolio of green and social impact projects. For example, you could invest in your existing IF ISA provider, as well as in Ethex.

If you’re unsure about your options, the Ethical Consumer magazine has a useful list of different IF ISA providers, including Ethex who offer a range of different green and socially positive investments.

It is important to note that the tax benefits of the Individual Savings Account are subject to personal circumstances and may change in the future. Your capital is at risk when you make an investment and investing via an ISA does not mitigate or change the risk of any financial loss.

Top: Bardsey Primary School, from above. A 107kWp system, part funded by the Solar for Schools CBS, and installed in Feb 2022.
Bottom: Students from Ark Kings school in Greater Birmingham, installed in December 2023. These students are part of a workshop that we lead last month, as part of British Science Week.

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