TEST OUT NEW ISAS

PEER-TO-PEER lending is where you lend your savings to individuals and companies.

Returns can be as high as 7.5 pc — and if you invest through a so-called Innovative Isa, the interest you earn will be tax-free.

However, the higher returns come with more risk. Unlike a regular Isa, your money is not protected by the Financial Services Compensation Scheme. So if the borrower defaults, you could face big losses.

Experts say you should put no more than 10 pc of the money you’ve set aside for an Isa into this type of account.

There are only a handful of companies offering this type of Isa, but the pace is gathering.

Last month, Stelios HajiIoannou’s easyGroup launched an easyMoney Isa that aims to deliver 4.05 pc a year.

Your cash is put into short-term loans to property investors.

Another Isa allows people to invest directly in the restoration of historic buildings.

The Isa, launched by Oaksmore Portfolios, advertises returns of up to 7.5 pc a year over a five-year term. The minimum investment is £1,000.