Investors also moved vast sums out of Cash ISAs over the same period as inflation increased in the wake of Brexit.
Investors opened 2,000 accounts in the first 12 months of the Innovative Finance Individual Savings Account going live, the latest figures from Her Majesty’s Revenue and Customs for the 2016/17 tax year show.
The tax-wrapper, increasingly known as the IFISA, was championed by former chancellor George Osborne who first announced it back in 2015. Regulatory hurdles proved something of a test for its adoption with only a handful receiving full authorisation in the first nine months of its launch.
While today there are more than 30 firms offering the IFISA, most of these products have been launched in recent months and so the relatively small take-up of the IFISA at least partly reflects this inertia.
The period also saw Cash ISAs plummet in popularity by more than a third compared to the previous year with £20bn less (£39bn) tucked away than the previous year in them. Stocks and Shares ISAs saw £1.2bn of growth inflows to £22.3bn for the same period. Inflation pressure hits cash accounts as sterling's weakness increased inflation while rates stayed low.
The average size of a portfolio opened with in IFISAs was £8.5k, suggesting investors allocated more half of their allotted allowance for the year to P2P and other alternative lending assets. The current tax year has limit increased to £20k.
You can find more about the Innovative Finance ISA on our dedicated page here.