Guidance

Tax-free savings newsletter 7 — March 2023

Published 17 March 2023

1. Spring Budget 2023

The following is a summary of all the announcements in the Spring Budget on 15 March 2023 in connection with tax free savings.

1.1 2023 to 2024 Individual Savings Account (ISA) limits

The government announced that for the tax year 2023 to 2024:

• The Junior ISA (JISA) and Child Trust Fund (CTF) limits will remain at £9,000
• The ISA limit will remain at £20,000

1.2 Help to Save

The government also announced that the Help to Save scheme is being extended by 18 months to April 2025. Consultation on simplification of the scheme will take place in the Spring.

1.3 ISA and Child Trust Fund regulations consultation

The government will restrict eligibility to manage ISA and Child Trust Funds to financial institutions with a UK presence. The government will legislate by Statutory Instrument in the Summer for commencement in April 2024.

A technical consultation will take place in the Spring on these amendments to the ISA and Child Trust Fund regulations.

2. Amendments to Child Trust Fund and ISA regulations

Between 12 November 2022 and 21 December 2022, a technical consultation took place on the practical operation of draft ISA and Child Trust Fund regulations.

We received 5 responses in total, 2 of which only sought clarification on one aspect of the changes. The remaining responses have resulted in minor changes to the text of the regulations and, for the changes relating to investor protections, a removal of some of the bulk transfer proposals.

The regulations were laid on 7 March 2023 and will become effective from 6 April 2023. The new regulations will:

1. Provide that loans between connected parties (such as a director and their company) via a Peer to Peer (P2P) arrangement are not qualifying investments for Innovative Finance ISAs, mirroring the approach taken in equivalent crowdfunding arrangements. The change will not apply retrospectively.
2. Extend the Dormant Assets Scheme to include stocks and shares ISAs. The restriction which currently limits the returned funds to an ISA of the same type, with the same manager and in the same type of ISA, has been removed to accommodate circumstances where the originating manager is no longer approved.  Recovered funds may be placed into any type of ISA. If placed into a Lifetime ISA, recovered funds will be subject to the annual subscription limit.
3. Accommodate the introduction of the overseas funds regime by amending the current definition of ‘recognised undertakings for the collective investment in transferable securities (UCITS)’. Further changes may be needed as the overseas funds regime establishes itself and will be communicated as necessary.
4. Provide that alternative finance arrangements (such as Sharia compliant transactions) qualify for an innovative finance ISA, mirroring the approach taken in cash and stocks and shares ISAs.
5. Accommodate changes in Northern Ireland regarding terminal illness as they relate to Junior ISA and Child Trust Funds. The changes will permit withdrawals where the death of a child in Northern Ireland is expected within 12 months (rather than 6), allowing the parents of a terminally ill child to access funds at an earlier stage.
6. Remove the requirement to provide certain personal information in Child Trust Fund annual statements. If the provider wishes to continue to do so will be a decision for the provider, but there will be no obligation.
7. Clarify that shares in an investment trust must be listed and subject to a public offer, effectively reverting to the earlier, clearer, definition.
8. Introduce additional requirements where ISA managers or Child Trust Fund providers cease to act or qualify, or have their approval withdrawn, thereby providing additional consumer protection and aiding consumer understanding.
9. Provide that ISA Managers and Child Trust Fund providers must not accept new subscriptions or open new accounts from the date of the notice withdrawing approval or ceasing to qualify and Junior ISA managers and Child Trust Fund providers will only have their approval withdrawn or cease to qualify when every account has been transferred to another manager or provider.

The ISA and Child Trust Fund Manager guidance on GOV.UK will be updated to reflect these changes.

3. ISAs and Junior ISAs

3.1 Changes to the list of approved ISA managers

We’ve made a small change to the list of approved ISA managers to make it more accessible and easier to use on mobile devices. The details shown for each manager haven’t changed, just how it is displayed.

We’ll continue to keep the list of approved ISA managers updated. Updates will be published on the first working day of each month.

As an ISA manager, if you need to update any of your details, you should use the ISA manager notification of changes form.

3.2 Changes to the status of listed investments

As a result of recent technical queries, we would like to remind ISA managers of the impact on the qualifying status of ISA investments, where there is a change to the listing status.

Suspended listed investments

When the listing of an investment is suspended, it would continue to meet the definition of being listed until the investment is delisted.

Delisted investments

When an investment is delisted, or the listing is cancelled, the investment no longer meets the requirements of the ISA regulations and must be removed.

3.3 ISA and Junior ISA manager returns of information and statistical information for 2022 to 2023

The deadline for filing your annual return of ISA account information and ISA and Junior ISA statistical returns for the tax year ending 5 April 2023 is 4 June 2023.

Find more information about:

• making annual returns of ISA account information
• ISA statistical information
• Junior ISA statistical information

3.4 ISA and Junior ISA subscriptions

We would like to remind you to follow the HMRC guidance for ISA managers regarding the date of subscriptions.

Where you have an instruction from the investor and you are in control of the collection of the payment, the date of subscription is the date you are instructed to collect the payment, provided:

• the instruction was accepted
• the payment is received in due course

The guidance covers payments by cheque, Direct Debit, debit card and transfers from a non-ISA account held with the same ISA manager.

4. Child Trust Funds

4.1 Child Trust Fund returns of information for 2022 to 2023

The deadline for filing your annual return of information for the tax year ending 5 April 2023 is 4 June 2023.

You must report details of all Child Trust Fund accounts you managed during the return period, including Child Trust Funds transferred in, and where the child has died. Details of Child Trust Fund accounts transferred to another provider do not need to be reported to HMRC.

The annual Child Trust Fund return can only be submitted to HMRC electronically. For each Child Trust Fund managed during the period, the return must include the:

• child’s unique reference number
• type of account
• registered contact for the account (if there is one)
• aggregate market value of the investments held under the account at 5 April 2023
• total cash subscribed to the account during the return period ending on 5 April 2023

Find more information about Child Trust Fund returns of information.

5. Lifetime ISA

Upon application to open a Lifetime ISA account, we carry out checks to ensure that the identity of the investor matches our current data records.

The information we check is:

• first name
• surname
• date of birth
• National Insurance number

If the information you provide does not match our systems, the opening of the account cannot progress.

To mitigate against any potential errors occurring, Lifetime ISA managers should make sure that prior to making any subscriptions, investors have checked their details match those held by HMRC.

This can only be done by the investor, by accessing their personal tax account.