Guidance

ISA manager bulletin 78

Published 23 January 2019

Junior Individual Savings Account (ISA) subscription limits

As announced at Budget 2018, from 6 April 2019 the Junior ISA subscription limit will increase to £4,368.

Implication of changes to financial services passporting for ISA managers

In the event the UK leaves the EU without agreement there will be changes for ISA managers based in the European Economic Area (EEA).

The Government has previously announced that, if necessary, it would introduce a temporary permissions regime for inbound passporting EEA firms and funds.

This will enable relevant firms and funds which passport into the UK to continue operating in the UK if the passporting regime ends when the UK leaves the EU.

For ISA managers, based in the EEA, you need to know the following:

1. ISA managers who enter the temporary permissions regime will be able to continue to act as ISA managers.

2. EEA based ISA managers who do not enter the temporary permissions regime will need to make arrangements for the transfer of their ISA book to another manager in accordance with the ISA regulations.

3. A temporary permissions regime will also be created for EEA based investment funds which are currently marketed to UK investors under the passporting regime. EEA Undertakings for Collective Investment in Transferable Securities (UCITS) funds which enter the temporary permissions regime will remain qualifying investments for stocks and shares ISA. This means that investors will be able to continue to hold existing investments, as well as making new ones.

The Financial Conduct Authority has published guidance for how financial services firms should prepare for such a scenario – which includes information about the temporary permissions regime.

If you are an EEA based ISA manager and you would like more information about this contact us to discuss further, by emailing: savings.audit@hmrc.gsi.gov.uk.

Lifetime ISA I.T. requirements

The final I.T. functions which will enable Lifetime ISA providers to report bonus corrections, new or corrected withdrawal charges to HMRC will go live on 12 March 2019.

Lifetime ISA providers will need to have all their Lifetime ISA I.T. in place by that date and be in a position to meet their full reporting requirements by 30 June 2019.

HMRC have contacted all Lifetime ISA providers with details of the final I.T. functions. Lifetime ISA Providers who cannot meet either of these deadlines must notify HMRC’s Software Development Support Team.

Lifetime ISA transfer history form

HMRC have produced a model ISA transfer history form when a lifetime ISA is transferred between ISA managers. The form is not available on GOV.uk but providers of Lifetime ISAs can request a copy from HMRC by sending an email to: savings.audit@hmrc.gsi.gov.uk.

The use of e-money wallets for holding ISA subscriptions

We are aware that some ISA managers have arrangements in place with e-money and e-wallet providers to receive and hold investor subscriptions pending investment.

ISA regulation 6(4) states that cash subscriptions and other cash held by an ISA account manager must be deposited in an account with a deposit taker as defined in S.853 Income Tax Act 2007. The account with a deposit taker has to be designated as an ISA account for the purposes of the ISA regulations and should be in the name of the investor.

HMRC does not consider subscriptions held in e-money wallets to meet these requirements. ISA managers must ensure that cash subscriptions and other investor funds are held in accordance with the ISA regulations.

ISA managers who hold ISA funds with e-money providers should email: savings.audit@hmrc.gsi.gov.uk.

Annual returns of ISA statistical information

All ISA managers are reminded that they are required to make both an annual market value and an annual subscription return of statistical information to HMRC within 60 days of either:

• 5 April of each year this is by 4 June
• the date of ceasing to qualify, or act as a manager

Managers must report details for all ISAs to which subscriptions have been made during the year. Managers may be charged penalties under Schedule 23, FA 2011 for falling to make a return or for making an incorrect return. HMRC’s ISA managers’ guidance explains how to complete the ISA14 stats, ISA14a stats and ISA25 stats forms.

Both the ISA14a stats and ISA25 stats forms will include a new question asking managers to report the number of ‘continuing accounts of a deceased ISA investor’ they hold on 5 April 2019.

Applying for HMRC ISA manager approval

The print and post form that financial institutions complete to apply to HMRC for approval to be an ISA manager has been amended. The form presents applicants with the appropriate sections that must be completed when they indicate on the form that they want to offer cash, stocks and shares, junior or innovative finance ISAs.

The changes to the form:

1. Provide HMRC with the information needed to assess an application for approval to be an ISA manager.
2. Reduce the need for HMRC to ask applicants to provide further information about their application.
3. Help speed up HMRC’s decision making process.

This form is not to be used when ISA managers apply to HMRC for approval to offer Lifetime ISAs to their investors. There’s a separate online service for HMRC approval to offer Lifetime ISAs.