The Individual Savings Account (Amendment) Regulations 2023
Citation and commencement1.
These Regulations may be cited as the Individual Savings Account (Amendment) Regulations 2023 and come into force on 6th April 2023.
Amendment of the Individual Savings Account Regulations 19982.
Amendment of regulation 23.
(1)
(2)
(a)
after sub-paragraph (a) omit “or”, and
(b)
“; or
(c)
a recognised scheme in accordance with section 271A of the Financial Services and Markets Act 20007.”.
Amendment of regulation 4ZE4.
In regulation 4ZE (permitted withdrawals from a junior ISA account where the named child is terminally ill)8, in paragraph (ii) of Case 1 in paragraph (2)(b) and in paragraph (6)(b), after “section 72(5) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (the care component)” insert “and, for this purpose, section 66(2)(a)9 of that Act (attendance allowance for the terminally ill) is deemed to apply as if for “6 months” there were substituted “12 months”.”
.
Amendment of regulation 5C5.
(a)
in paragraph (1), after “section 1 or 2 of the Dormant Bank and Building Society Accounts Act 2008 (“the 2008 Act”)” insert “or sections 2, 5, 8, 12 or 14 of the Dormant Assets Act 202211”
,
(b)
in paragraph (2)(a), omit “cash”, and
(c)
in paragraph (2)(b)—
(i)
omit “cash”, and
(ii)
omit “, with the same account manager”.
Amendment of regulation 76.
(a)
“(d)
subject to paragraph (3), shares in an investment trust listed or admitted to trading on a recognised stock exchange;” and
(b)
in regulation 7(3)—
(i)
in the opening words, after “paragraph (2)(a)” insert “or (d)”
, and
(ii)
in sub-paragraph (a), after “in a company” insert “or trust”
.
Amendment of regulation 8A7.
(a)
in paragraph (2)(a), for “paragraph (3)” substitute “paragraphs (3) and (3A)”
,
(b)
in paragraphs (2)(b) and (2)(c), for “paragraph (3)(c) and (d)” substitute “paragraphs (3)(c) and (d) and (3A)”
, and
(c)
in paragraph (3)(a), for “or capital or both” substitute “, capital or profit, or any combination of these payments;”
, and
(d)
“(3A)
The conditions in this paragraph are—
(a)
the payment is not made to the lender by reason of that person’s or another person’s status, whether past, present or prospective, as an employee, director, partner, trustee or the holder of any office;
(b)
the borrower is not connected with the lender, and for this purpose “connected” has the meaning given in section 170 of ITA 2007 with the omission of “in period A” in subsection (7); and
(c)
the payment must not be connected with any other investment held outside an account by the account investor or any other person, and for this purpose an investment is to be treated as connected with another investment if—
(i)
either investment was made with reference to the other or with a view to enabling the other investment to be made on particular terms; or
(ii)
the terms on which either investment was made would have been significantly less favourable if the other investment had not been made.”.
Amendment of regulation 178.
(a)
in paragraph (1), at the end insert “which is not a junior ISA account”
,
(b)
“; and
(d)
may specify that, from the date of the notice, the account manager—
(i)
must not accept any subscriptions or open new accounts, or
(ii)
must not accept any subscriptions or open new accounts except to the extent specified in the notice.”,
(c)
in paragraph (4)—
(i)
for “regulations 21” substitute “regulation 21”
,
(ii)
omit “or 21B (as appropriate)”,
(iii)
for “regulation 20(3)” substitute “regulation 20(4)”
, and
(d)
“(5)
Where the account manager does not intend to make a bulk transfer of accounts, the account manager must, in addition to notifying the account investor in accordance with paragraph (4), notify the account investor of that intention and draw to the account investor’s attention the fact the account will cease to be exempt from tax unless it is transferred as specified in regulation 20(4).
(6)
The account manager must comply with paragraph (5) within the period beginning with the date of the Board’s notice under paragraph (1) and ending with the date which is 15 days before the date on which the Board’s approval is withdrawn.
(7)
Where a notice under paragraph (1) makes a specification under paragraph (3)(d)(i), from the date of the notice the account manager must not accept any subscriptions or open any new accounts.
(8)
Where a notice under paragraph (1) makes a specification under paragraph (3)(d)(ii), from the date of the notice the account manager must not accept any subscriptions or open any new accounts except to the extent specified in the notice.”.
Insertion of regulation 17A9.
“Account manager – withdrawal by Board of approval of junior ISA manager17A.
(1)
This regulation specifies the circumstances (“the disqualifying circumstances”) in which the Board may by notice withdraw their approval of a person as an account manager in relation to a junior ISA account.
(2)
The disqualifying circumstances to which paragraph (1) refers are that the Board have reason to believe—
(a)
that any provision of these Regulations is not, or at any time has not, been satisfied in respect of an account manager by the account manager; or
(b)
that a person to whom they have given approval to act as an account manager is not qualified so to act.
(3)
The notice to which paragraph (1) refers—
(a)
may withdraw an approval in part, that is, in respect of particular types of account specified in the notice;
(b)
shall specify the disqualifying circumstances;
(c)
shall specify that the withdrawal takes effect from the date on which the last of the accounts is transferred to another manager; and
(d)
shall specify that from the date of the notice, the account manager must not accept any subscriptions or open any new accounts.
(4)
On receiving the notice referred to in paragraph (1), subject to any appeal in accordance with regulation 18, the account manager must notify the person who is the account investor in relation to the account held with the account manager of the right to transfer the account under regulation 21B15.(5)
From the date of the notice referred to in paragraph (1), the account manager must not accept any subscriptions or open any new accounts.”.
Amendment of regulation 1810.
In regulation 18(1) (account manager – appeal against Board’s withdrawal of approval)16, after “regulation 17” insert “or 17A”
.
Amendment of regulation 1911.
(a)
“(d)
where the account is not a junior ISA account, include a statement that, unless the account is transferred in accordance with these Regulations, it will cease to be exempt from tax.”, and
(b)
“(6)
Paragraph (7) applies in relation to an account manager of a junior ISA account who has given a notice referred to in paragraph (1).
(7)
An account manager must not cease to act as an account manager in relation to a junior ISA account until that junior ISA account has been transferred to another account manager in accordance with paragraph (8) or (8H) of regulation 21B.
(8)
Where the account manager does not intend to make a bulk transfer of accounts, the account manager must notify the account investor of that intention and draw their attention to the provisions in regulation 20(3).”.
Amendment of regulation 2012.
(a)
in paragraph (3)(a), omit “17(4) or”, and
(b)
“(4)
Where an account investor—
(a)
receives a notice under regulation 17(4), and
(b)
within the period of 30 days beginning with the date from which the Board’s approval is withdrawn transfers the account to another manager pursuant to regulation 2119 or 21B (as appropriate),the period between the date from which the approval is withdrawn and the transfer to the transferee shall be ignored for the purposes of determining whether the account has at all times been managed by an account manager.
(5)
Paragraph (6) applies in relation to an account manager of a junior ISA who has sent a notice referred to in paragraph (1).
(6)
An account manager must not cease to act as an account manager in relation to a junior ISA account until that account has been transferred to another account manager in accordance with paragraph (8) or (8H) of regulation 21B.”.
These Regulations amend the Individual Savings Account Regulations 1998 (S.I. 1998/1870) (“the principal Regulations”).
Regulation 3 amends regulation 2 of the principal Regulations to provide that schemes authorised in accordance with section 271A of the Financial Services and Markets Act 2000 are recognised UCITS (Undertaking for Collective Investment in Transferable Securities). It also amends the definition of “dormant account” in consequence of the coming into force of the Dormant Assets Act 2022 (c. 5).
Regulation 4 makes amendments to regulation 4ZE of the principal Regulations to update the definition of terminal illness as it applies to a child in Northern Ireland. As the amendments to the definition of terminal illness made to section 66(2) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 by section 1 of the Social Security (Terminal Illness) Act (Northern Ireland) Act 2022 do not apply for the purposes of the principal Regulations, regulation 4ZE is amended to take account of those changes.
Regulation 5 amends regulation 5C of the principal Regulations in consequence of the coming into force of the Dormant Assets Act 2022.
Regulation 6 amends regulation 7 of the principal Regulations so that the requirements for shares which are not in an investment trust are the same as for shares which are in an investment trust.
Regulation 7 amends regulation 8A of the principal Regulations to permit investment in alternative finance investments and makes provision as to loans by connected persons.
Regulation 8 amends regulation 17 of the principal Regulations to take account of the insertion of a new regulation 17A. It also sets out the requirements for the giving of notice by account managers to account holders. New regulations 17(5) and (6) require the account manager to remind the account investor, at least 15 days before the Board’s approval is withdrawn, that the account will cease to be exempt from tax unless it is transferred to another account manager in accordance with regulation 20(4).
Regulation 9 inserts a new regulation 17A into the principal Regulations which makes provision as to the withdrawal of approval from junior ISA account managers.
Regulation 10 amends regulation 18 of the principal Regulations to provide for a right of appeal where the Board withdraws a junior ISA manager’s approval under regulation 17A.
Regulation 11 amends regulation 19 of the principal Regulations to require account managers to inform account holders that unless accounts are transferred to another manager, the account will cease to qualify for tax relief. In relation to junior ISAs, the manager may cease to act only when the accounts have been transferred to another manager.
Regulation 12 amends regulation 20 of the principal Regulations to require account managers who cease to qualify to inform account holders that, unless accounts are transferred to another manager within 30 days of the account manager’s notifying the Board, the account will cease to be exempt from tax. It also makes amendments to regulation 20 consequent on the amendments to regulation 17 and the insertion of regulation 17A into the principal Regulations.
A Tax Information and Impact Note will be published on the HM Government website at https://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins.