Guidance

Tax-free savings newsletter 8 — June 2023

Published 8 June 2023

1. Help to Save consultation

The government has published a consultation on Help to Save reform, seeking views from stakeholders on how the scheme could be reformed to:

• ensure it has longevity as a key savings product for working people on low incomes
• encourage take-up in the target population
• provide the best value for taxpayers

This consultation will close on 22 June 2023.

2. Audits of ISA managers

During the 2022 to 2023 tax year, we conducted 122 inspections of ISA managers. Our inspections identified some common themes and issues. The most common issues we identified involved:

• ISA returns
• applications
• terms and conditions

We’d like to remind ISA managers of the requirements in these areas and where the relevant guidance can be found.

2.1 ISA returns

Annual return of account information (COM100 return)

This is the account level return of all ISA accounts under management, including those that did not receive a subscription in the tax year. Accounts that have been transferred out during the tax year of the return, should not be included as they will be reported by the receiving ISA manager.

Returns can be made using the spreadsheet template or a flat text file. When submitting the return, we encourage providers to utilise the Secure Data Exchange Service (SDES).

The deadline for the return is 4 June (each year). Managers may be charged penalties for failing to make a return by the deadline or for making an incorrect return.

Find more information on annual return of account information.

For queries relating to the annual return of account information you can contact [email protected].

Annual return of statistical information

This is the high-level return of:

• market value data from all ISA accounts under management
• subscription details for all ISAs subscribed to during the tax year

Returns must be made using the ISA14a annual return of statistical information form. This form is designed to be completed online then printed and posted to the address on the last page. Returns can also be submitted by email to [email protected].

Separate returns must be made for Junior ISAs using the form JISA14a.

The deadline for the return is 4 June (each year). Managers may be charged penalties for failing to make a return by the deadline, or for making an incorrect return.

Find more information on annual return of statistical information.

For queries relating to the annual return of statistical information you can contact HMRC by email at [email protected].

Interim and annual tax claims

These returns are claims for repayment of UK Income Tax deducted from income in respect of ISA investments.

Claims must be made on either the ISA10 interim claim form or the ISA14 annual claim form.

An ISA14 claim only needs to be made to HMRC when either:

• UK Income tax has been deducted from income earned by investments held in an ISA and no interim claims have been made
• interim claims have been made to HMRC during the period ending 5 April and the ISA14 consolidates the amounts claimed on those interim claims

A nil return is no longer required.

Managers need to send interim claims (ISA10) and annual return and claims (ISA14) by post to:

Charities, Savings and International 1
HM Revenue and Customs
BX9 1AU

Find more information on interim and annual tax claims.

Applications

We’d like to remind ISA managers that a fresh investor application is required following a break in subscriptions.

All applications must include the personal details of the investor, the component they are applying for, the tax year, and the various declarations and authorisations required by the ISA Regulations.

Where ISA managers accept applications made online or by telephone, they must follow the ‘applications not in writing’ process, which includes notifying the investor of the contents of the declaration within 5 business days.

ISA managers must retain the most recent application to evidence that the account is eligible for tax relief. Where an account remains open, even where no subscriptions are being made, the account is still receiving tax relief, so the document remains a relevant document in each tax year the account is open.

Applications need to be retained for 3 years after the date of closure or transfer out. If managers have paper applications they wish to destroy before this time, they will need to take a digital image copy or apply the ‘not in writing’ procedures.

Find more information on investor information.

Terms and conditions

ISA accounts must be operated under terms agreed in writing between the ISA manager and the investor. The terms and conditions must include some specific terms set out in the ISA managers’ guidance. Failure to include the required terms will invalidate all accounts operated under the defective terms and conditions.

Find more information on terms and conditions.

3. Lifetime ISA (LISA)

3.1 Setting up a LISA account

Upon application to open a LISA 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 Application Programming Interface (API) errors occurring, LISA 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.

3.2 First payment date

The opening date of a LISA is the date the first payment is made when an account is opened by an investor.

Therefore, you must only create a LISA account once you have received the investors funds.

Creating an account without funds can lead to API issues with the first subscription date and some investors may be unaware an account has been created.

Find more information on first payment dates.

3.3 LISA withdrawal charges

This is a reminder that you must pay any withdrawal penalties to HMRC within the timescales. These are set out in the HMRC guidance and deduct any penalty charges prior to paying the investor their funds.

After making a withdrawal you must:

• notify HMRC of a withdrawal from a Lifetime ISA, and any withdrawal charges that are due, on the same monthly claim
• make payment of withdrawal charges to HMRC no later than 28 days after the end of the claim period in which the chargeable withdrawal occurred

4. Recognised Stock Exchanges

The Cape Town Stock Exchange was granted Recognised Stock Exchange status under s1005(1) ITA 2007 as of 15 May 2023.

The exchange operates 2 markets, an ‘Equity’ market and a ‘Debt’ market. Securities admitted to trading on both markets will be ‘Listed’ for the purposes of s1005(3) ITA 2007.