Who can invest in an ISA if you're an ISA manager
Check if an investor qualifies for an ISA and what to do when an investor dies.
Who can subscribe to an individual savings account (ISA)
From 6 April 2024, to be eligible to subscribe to any type of ISA, an investor must be an individual aged 18 or over. To open a Lifetime ISA an investor must be aged between 18 and 40 years old, but they can make payments until they reach 50.
Before 6 April 2024, 16 and 17 year olds could apply for a cash ISA and there are transitional arrangements in place.
Transitional arrangements
The transitional arrangements end at 11:59pm on 5 April 2026.
If on 5 April 2024, an individual was 16 or 17 and did not have an existing cash ISA, they are still eligible to apply for and subscribe to a single cash ISA in any tax year.
If an individual aged 16 or 17 holds an existing cash ISA account, then they may continue to subscribe or transfer. When a fixed rate product ends:
- maturing funds may be transferred to a new cash ISA
- a new or continuing product can be offered if it is provided for in the terms and conditions of the existing account
You may accept a transfer of an existing cash ISA held by an individual aged 16 or 17, but all current year subscriptions must be transferred, and the original account closed.
An individual aged 16 or 17 with a cash ISA is eligible for additional permitted subscriptions to that ISA.
You can choose whether to offer cash ISAs to individuals who are within the transitional arrangements.
Eligibility to open an ISA
The investor must be either:
- resident in the UK
- working as a Crown employee serving overseas and paid out of the public revenue of the UK — typically a serving member of the armed forces or a diplomat, if they are not resident in the UK
- married to, or in a civil partnership with, a Crown employee
You should note that married and civil partners do not necessarily have the same residence status.
For Lifetime ISAs a non-resident investor can only make a:
- defaulted Lifetime ISA subscription
- a returned Lifetime ISA withdrawal after the failure of a first-time residential purchase may be made by a non-resident investor
Exceptions for non-resident investors and investors who have subscribed to another ISA of the same type in that tax year, include those who have:
- made additional permitted subscriptions
- flexible ISA replacement subscriptions
- defaulted cash subscriptions
- Help to Buy ISA reinstatement subscriptions
An additional exception for non-resident investors to make subscriptions include those who have defaulted investment subscriptions.
For a Lifetime ISA, an investor can only pay into more than one Lifetime ISA in a tax year to either:
- make a defaulted Lifetime ISA payment
- return a Lifetime ISA withdrawal after the failure of a first time residential purchase
The investor should not have exceeded the overall subscription limit to their ISAs.
Find more about:
- rules on ISA subscriptions
- managing additional permitted subscriptions
- Lifetime ISA withdrawal after the failure of a first time residential purchase
The residence qualification
To subscribe to any ISA the investor must meet the UK residence qualification. The section ‘who can subscribe to an ISA’ provides exceptions to this rule.
The investor can determine their residency status by using the RDR3: Statutory Residence Test. They are either UK resident (regardless of whether split year treatment applies) or not resident for the whole of a tax year.
The investor can also use an online residence indicator.
The UK means England, Scotland, Wales, and Northern Ireland. It does not include the Channel Islands or the Isle of Man.
Investors must declare in their applications to subscribe that they meet the residence qualification — read the section about applications in writing in Information you need from investors when they apply for an ISA.
Investors must notify you if they no longer meet the residence qualification because they:
- have become non-resident
- no longer work as a Crown employee serving overseas
- are no longer married to, or in a civil partnership with, an eligible person
If this happens, an existing ISA does not need to be closed, but no further subscriptions to the ISA can be made apart from the exceptions to the rule, unless the investor meets the residence qualification again.
If an investor has a continuous application in place and they have been non-resident, there will always be a gap year as the period of non-residence must last for a whole tax year as per the statutory residence test. No subscriptions will be possible for that gap year.
If the investor again becomes UK resident, they should make a declaration to confirm they are a UK resident, including their permanent UK address. It is not necessary for them to complete a full new ISA application for an existing account. This does not apply to Lifetime ISAs as the declaration contained within the application form has effect for each year in which the individual makes a subscription to the account. The permanent address is necessary for reporting purposes and it is important to have investors current details. Read more information on returns of information.
Residence position not confirmed
When you are notified of a new address overseas, but the investor has not informed you they are non-resident, you can continue to accept subscriptions based on the existing (resident) declaration until 5 April of that tax year.
Subscriptions should not be accepted for the following tax year, other than the exceptions to the rule, until the investor has confirmed that they expect to be resident in the UK by completing a declaration. This does not apply for for a Lifetime ISA.
You will need to let the investor know that subscriptions must not be accepted in the following tax year. You can then adopt one of 2 possible approaches:
- from the date that you receive notification of the non-UK address, you can tell the investor that any further subscriptions will be refused unless they confirm they expect to be resident in the UK in the same tax year they left the UK
- you can tell the investor you will continue to accept subscriptions for the tax year they leave the UK, unless they tell you they expect to be non-resident for the tax year
Non-UK residence confirmed
Some circumstances result in all subscriptions to an ISA made in that year, including any income or growth relating to those subscriptions (other than the exceptions), needing to be removed and any Lifetime ISA bonus received for that year returned to HMRC.
This can happen if the investor:
- declares in the tax year that they are non-resident — the subscriptions cannot be reinstated after the tax year end even if the investor later establishes they were a resident
- informs you that they left the UK in an earlier tax year and became non-resident — all subscriptions will be treated as invalid unless they once again become UK resident and complete a declaration including their permanent UK address
- notifies you that they may become non-resident (a notification is not a categorical declaration of non-residence, so no subscriptions should be removed) — action should only be taken to remove subscriptions if the investor confirms they are non-resident
For Lifetime ISAs, you must always contact HMRC before taking any voiding action around residency status. This is because the account may have received a government bonus payment.
Subscriptions to multiple ISA types
From 6 April 2024 investors can subscribe in each tax year to multiple ISAs of the same type within the annual subscription limits. The exceptions are that:
- investors with a Lifetime ISA (LISA) are still restricted to subscribing to one LISA a year
- investors with a Junior ISA (JISA) are still restricted to subscribing to one JISA a year
- those 17 and under are not permitted to subscribe to more than one cash ISA in a tax year
You are responsible for making sure the overall ISA limit is not exceeded for subscriptions made with you. Oversubscriptions and any related gains in the current tax year can be removed to correct the error. The investor should confirm with you which subscriptions should be removed.
It is not possible for you to know if investors are subscribing, or have subscribed, with other ISA managers, or the amount of subscriptions they have. The individual investors remain responsible for managing their overall subscription limits.
Find out more on how to close, void or repair an ISA.
Where the investor transfers current year subscriptions from one ISA to another the subscriptions are treated as if they were made to the receiving ISA.
Subscriptions to accounts that do not count towards the overall limit include when you have:
- made additional permitted subscriptions
- flexible ISA replacement subscriptions
- defaulted cash subscriptions
- defaulted investment subscriptions
- Help to Buy ISA reinstatement subscriptions
For Lifetime ISAs, only a defaulted Lifetime ISA subscription or a returned Lifetime ISA withdrawal after the failure of a first-time residential purchase do not count towards the overall subscription limit.
For flexible ISAs, replacement funds can only be credited to the account they originated from.
Find more about:
- rules on ISA subscriptions
- managing additional permitted subscriptions
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Lifetime ISA withdrawal after the failure of a first time residential purchase
- flexible ISA transfer
Investors’ tax returns
Investors do not have to declare income or gains in an ISA on their tax returns, unless the ISA subscription has been made void.
Capital losses in respect of ISA investments are disregarded for the purposes of Capital Gains Tax.
Corresponding deficiency relief is not allowed on life insurance policies within an ISA.
Death of an investor
Any ISA held will be designated a ‘continuing account of a deceased investor’ for the period beginning on the death of the account investor and ending on the earlier of the:
- completion of the administration of the deceased’s estate
- day falling on the third anniversary of the death
- closure of the account
There is no requirement for you to check with the executors of a deceased investor if the administration of the investor’s estate has been completed.
No subscriptions, including replacement flexible subscriptions, can be made into a ‘continuing account of a deceased investor’. However, active management of the investments already held within the account may continue subject to the terms and conditions of the account.
Funds held within a continuing account of a deceased investor would continue to benefit from ISA tax advantages. Any interest, dividends or gains in respect of investments in a continuing account of a deceased investor are exempt from tax.
A life insurance policy within an ISA will pay out on the death of the investor. The policy remains part of ISA business until a valid claim is made. If interest is paid into the ISA by the insurer because of a delay in paying the claim, the interest:
- will be exempt from tax
- can be paid or credited without deduction of tax
If the death proceeds are held outside of the deceased’s ISA pending settlement of the claim, then any interest paid by the insurer should have tax deducted at the basic rate.
Personal representatives cannot apply to change a stocks and shares ISA into a cash ISA or vice versa with the same ISA manager.
They cannot request the transfer of a ‘continuing account of a deceased investor’ to an alternative ISA manager. However, these accounts can be included as part of a bulk transfer when an ISA manager ceases to qualify or transfers their ISA book.
If, after a period of 3 years, the administration of the account is ongoing and the account has not been closed, the account will cease to be a continuing account of a deceased investor. On the next working day following the third anniversary of the deceased’s death:
- you must remove the ISA wrapper from the account
- all subsequent income or gains will become taxable in the hands of the estate
Updates to this page
Published 5 April 2018Last updated 22 November 2024 + show all updates
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Information about the residence qualification has been updated to clarify that you must always contact HMRC before taking any voiding action around residency status for Lifetime ISAs.
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Information has been updated to confirm you must contact HMRC before taking any voiding action around residency status.
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Who can subscribe to an ISA, the residence qualification and subscriptions to multiple ISA types sections updated.
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Out of date guidance on what to do as a result of the death of an investor has been updated.
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First published.