The government is enable crowd funded debt securities to be held in individual savings accounts (Isa), meaning that all forms of crowd funded debt will be Isa eligible. It follows a government consultation on this last year.
The government will legislate in autumn 2016 to allow certain debt securities such as bonds issued by companies and offered via a crowd funding platform to be held in the new Innovative Finance Isa. This launches on 6 April 2016 when it will be available for peer to peer loans issued by individuals and companies.
The government will also work with the crowd funding sector and other interested parties to explore the case for enabling equity crowd funded investments to be held in the Innovative Finance Isa.
However, some believe that equity crowd funding is still developing and needs more time to develop a track record of delivering for investors. They argue crowd funded equity poses a higher risk for investors than crowd funded debt securities because the market tends to cater for riskier businesses and is less likely to provide individuals with regular returns on their investment.
It has also been pointed out that some of these businesses can already raise funds via Enterprise Investment Schemes (EIS) and Seed EIS (SEIS).
