OpenLegislation

The Individual Savings Account (Amendment) Regulations 2008

S.I. 2008/704 · Made 12 March 2008

Original text. legislation.gov.uk does not revise statutory instruments, so later amendments are not shown here. Changes made to it are listed under each provision when known.

Income Tax

Made 12th March 2008

Laid before the House of Commons 13th March 2008

Coming into force 6th April 2008

The Treasury make the following Regulations in exercise of the powers conferred by sections 694 to 701 of the Income Tax (Trading and Other Income) Act 2005f1 and section 151 of the Taxation of Chargeable Gains Tax Act 1992f2.

Annotations to the whole text

Footnotes

f1

2005 c. 5; sections 695, 696, 698, 699 and 700 were amended by paragraph 132 of Schedule 4 to the Commissioners for Revenue and Customs Act 2005 (c. 11) to replace references to the Commissioners of Inland Revenue with references to the Commissioners for Her Majesty’s Revenue and Customs.

f2

1992 c. 12; section 151 was amended by section 85 of the Finance Act 1993 (c. 34), section 64(2) of the Finance Act 1995 (c. 4) and paragraph 436 of Schedule 1 to the Income Tax (Trading and Other Income) Act 2005 (c. 5).

Contents

  1. 1Citation and commencement
  2. 2Amendment of the Individual Savings Account Regulations 1998 (S.I. 1998/1870)
  3. 3Amendment of regulation 2 (interpretation)
  4. 4Amendment of regulation 4 (general conditions for accounts and subscriptions to accounts)
  5. 5Amendment of regulation 6 (general investment rules)
  6. 6Amendment of regulation 7 (qualifying investments for a stocks and shares component)
  7. 7Amendment of regulation 8 (qualifying investments for a cash component)
  8. 8Amendment of regulation 9 (insurance policies)
  9. 9Amendment of regulation 10 (qualifying individuals who may invest under an account)
  10. 10Amendment of regulation 12 (conditions for application to subscribe to an account)
  11. 11Amendment of regulation 16 (account manager – appointment of tax representative)
  12. 12Amendment of regulation 22 (exemption from tax of account income and gains)
  13. 13Amendment of regulation 24 (tax liabilities and reliefs – account manager to act on behalf of account investor)
  14. 14Amendment of regulation 31 (returns of information by account manager)
  15. 15Amendment of regulation 34 (capital gains tax – adaptation of enactments)
  16. 16Amendment of regulation 35 (administration of tax in relation to accounts – supplementary)
  17. 17Amendment of regulation 36
  18. Signature
  19. Explanatory note

1Citation and commencement

These Regulations may be cited as the Individual Savings Account (Amendment) Regulations 2008 and shall come into force on 6th April 2008 immediately after the Individual Savings Account (Amendment) Regulations 2007f1.

2Amendment of the Individual Savings Account Regulations 1998 (S.I. 1998/1870)

The Individual Savings Account Regulations 1998f1 are amended as follows.

3Amendment of regulation 2 (interpretation)

(1)

Amend regulation 2 as follows.

(2)

Amend regulation 2(1)(a) as follows—

(a)

for the definition of “approved employee share ownership plan”f1 (and the other expressions defined with that expression) substitute—

  • ““approved SAYE option scheme” shall be construed in accordance with the SAYE code (see section 516(3) of ITEPA 2003f2);

  • “approved SIP” shall be construed in accordance with the SIP code (see section 488(3) of ITEPA 2003);”;

(b)

after the definition of “ building society bonus”f3 insert—

  • ““ceasing to be subject to the plan”, in relation to plan shares under an approved SIP, shall be construed in accordance with the SIP code (see section 488(3) of ITEPA 2003);”;

(c)

in the definition of “deposit-taker” for “section 481(2) of the Taxes Act” substitute “section 853 of ITA 2007”;

(d)

omit the definition of “income tax quarter”;

(e)

after the definition of “investment trust” insert the following definitions—

  • ““ITA 2007” means the Income Tax Act 2007f4;

  • “ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003f5;

  • “ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005f6;”;

(f)

in the definition of “investment trust” omit the words from “, and references” to the end of that definition;

(g)

after the definition of “notice” insert—

  • ““participant”, in relation to an approved SIP, shall be construed in accordance with the SIP code (see section 488(3) of ITEPA 2003);”;

  • “plan shares”, in relation to an approved SIP, shall be construed in accordance with the SIP code (see section 488(3) of ITEPA 2003) except that—

    1. (a)

      paragraph 87(6) of Schedule 2 to ITEPA 2003 (meaning of the word “shares” in the context of company reconstructions) shall not apply, and

    2. (b)

      in paragraph 88(2) of that Schedule (treatment of shares acquired under rights issue) the words “or securities or rights” shall be treated as omitted;”;

(h)

in the definition of “relevant authorised person” for “section 333A(12) of the Taxes Act” substitute “section 697(2)(b) of ITTOIA 2005”;

(i)

in the definition of “relevant European institution” for “section 326A(10) of the Taxes Act” substitute “section 697(2)(a) of ITTOIA 2005”;

(j)

omit the definition of “savings-related share option scheme”.

(3)

Amend regulation 2(1)(b) as follows—

(a)

in the definition of “authorised fund”f7 omit the words following “investment company”;

(b)

for the definition of a “Chapter 5 UCITS”f8 substitute—

  • “a “Chapter 5 UCITS” means a UCITS complying with Chapter 5 of the Collective Investment schemes sourcebook;”;

(c)

omit the definitions of “the first condition”, “the second condition”, “fund of funds scheme”, “money market scheme” and “the New Collective Investment Schemes Sourcebook”f9;

(d)

for the definition of “open-ended investment company” substitute—

  • ““open-ended investment company” means a company incorporated in the United Kingdom to which section 236 of the Financial Services and Markets Act 2000f10 applies;”;

(e)

in the definition of “non-UCITS retail scheme”f11, in paragraph (a), omit “New”;

(f)

in the definition of “qualifying units in or shares of a non-UCITS retail scheme”f12, in paragraph (a), omit “New”;

(g)

omit the definitions of “securities scheme”f13 and “the 1997 Regulations”;

(h)

in the definition of “umbrella scheme”—

(i)

in paragraph (i) of that definition for the words following “Taxes Act,” substitute “and sub-paragraphs (6) and (7) of regulation 7 of the Authorised Investment Funds (Tax) Regulations 2006f14 shall apply for the purposes of these Regulations as they apply for the purposes of those Regulations, and”, and

(ii)

in paragraph (ii) of that definition for the words following “in accordance with” substitute “subsection (4) of section 468A of the Taxes Actf15, and sub-paragraphs (2) and (3) of regulation 7 of the Authorised Investment Funds (Tax) Regulations 2006 shall apply for the purposes of these Regulations as they apply for the purposes of those Regulations;”;

(i)

for the definitions of “unit holder” and “unit trust scheme” substitute—

  • ““unit holder” means a person entitled to a share of the investments subject to the trusts of a unit trust scheme;

  • “unit trust scheme” has the meaning given by section 237 of the Financial Services and Markets Act 2000;”;

(j)

omit the definition of “warrant scheme”f16.

4Amendment of regulation 4 (general conditions for accounts and subscriptions to accounts)

In regulation 4(6), in each of sub-paragraphs (c) and (d), for “regulation 8(2)(c) and (d)” substitute “paragraphs (g), (h), (k), (l) and (m) of regulation 8(2)”.

5Amendment of regulation 6 (general investment rules)

(1)

Amend regulation 6f1 as follows.

(2)

In paragraph (1)(a) for “rule 15.4.4 of the Collective Investment Schemes Sourcebook” substitute “rules 6.3.5 and 6.3.5B of the Collective Investment schemes sourcebook”.

(3)

In paragraph (1)(b) for “rule 4.3.11 of the Collective Investment Schemes Sourcebook” substitute “rules 6.3.5 and 6.3.5A of the Collective Investment schemes sourcebook”.

6Amendment of regulation 7 (qualifying investments for a stocks and shares component)

(1)

Amend regulation 7f1 as follows.

(2)

In paragraph (2), in each of sub-paragraphs (b)(iii) and (d), for “paragraphs (7) and” substitute “paragraph”.

(3)

Omit paragraph (2)(e).

(4)

In paragraph (2)(h)—

(a)

in sub-paragraph (i) for “a savings-related share option scheme” substitute “an approved SAYE option scheme”;

(b)

in sub-paragraph (iii) for “employee share ownership plan” substitute “SIP”.

(5)

Omit paragraph (7).

(6)

In paragraph (8)—

(a)

in the words before sub-paragraph (a) for “trust, scheme or UCITS, or investments subject to the trusts of the scheme, as the case may be,” substitute “investment trust”;

(b)

in the words after sub-paragraph (b) for the words from “trust,” to the end substitute “investment trust”.

(7)

Omit paragraph (9).

(8)

In paragraph (10)(a) for “a savings-related share option scheme” substitute “an approved SAYE option scheme”.

(9)

In paragraph (14) omit “(e),” and for “, (g) or (ga)” substitute “or (g)”.

7Amendment of regulation 8 (qualifying investments for a cash component)

(1)

Amend regulation 8f1 as follows.

(2)

In paragraph (2) omit sub-paragraphs (c) and (d).

(3)

In paragraph (2)(g) omit “(e),”and for “, (g) or (ga)” substitute “or (g)”.

8Amendment of regulation 9 (insurance policies)

(1)

Amend regulation 9f1 as follows.

(2)

In paragraph (3)(d)(ii) for “regulation 2(1) of the Personal Portfolio Bonds (Tax) Regulations 1999f2” substitute “section 516 of ITTOIA 2005”.

(3)

In paragraph (7)(b)(i) for “final year in relation to the policy, within the meaning of section 546(4) of the Taxes Act” substitute “final insurance year in relation to the policy, within the meaning given by section 499 of ITTOIA 2005”.

9Amendment of regulation 10 (qualifying individuals who may invest under an account)

In regulation 10(2)(d)f1 for paragraph (ii) substitute—

“(ii)

who, though not resident in the United Kingdom, has general earnings from overseas Crown employment subject to United Kingdom tax within the meaning given by section 28 of ITEPA 2003,”.

10Amendment of regulation 12 (conditions for application to subscribe to an account)

(1)

Amend regulation 12f1 as follows.

(2)

In paragraph (3)(f) for paragraph (ii) substitute—

“(ii)

is a person who has general earnings from overseas Crown employment subject to United Kingdom tax within the meaning given by section 28 of ITEPA 2003,”.

(3)

In paragraph (3)(g)(iv) for “the application is not in writing” substitute “a written declaration is required by paragraph (7)”.

(4)

In paragraph (7)—

(a)

for “Where paragraph (3)(g)(iv) applies” substitute “Where the application is not in writing or the manager operates a record system under which all original written applications are not retained”;

(b)

for “therein referred to” substitute “referred to in paragraph (3)(g)(iv)”;

(5)

In paragraph (10)—

(a)

for “(3)(g)(iv) of this regulation” substitute “(7)”;

(b)

omit “of this regulation” where it secondly appears.

11Amendment of regulation 16 (account manager – appointment of tax representative)

In regulation 16(2)(a) for “subsection (5) of section 333A of the Taxes Act” substitute “section 698(2)(b) of ITTOIA 2005”.

12Amendment of regulation 22 (exemption from tax of account income and gains)

(1)

Amend regulation 22f1 as follows.

(2)

In paragraph (1)(a)(ii) for “by section 714(2) of the Taxes Act” substitute “under Part 12 of ITA 2007 (accrued income profits)”.

(3)

In paragraph (1)(a) for paragraph (iv) substitute—

“(iv)

on a profit on the disposal of a deeply discounted security within the meaning given by section 430 of ITTOIA 2005f2,”.

(4)

In paragraph (1)(a)(v) for “by section 541 of the Taxes Act” substitute “under Chapter 9 of Part 4 of ITTOIA 2005”.

(5)

For paragraph (1)(c) substitute—

“(c)

a deficiency arising in a tax year and falling within section 539(1) of ITTOIA 2005f3, so far as it relates to an account investment, shall not be allowable as a deduction from the total income of the account investor;”.

(6)

In paragraph (1)(e) for “section 660B of the Taxes Act” substitute “section 629 of ITTOIA 2005”.

13Amendment of regulation 24 (tax liabilities and reliefs – account manager to act on behalf of account investor)

In regulation 24(3)(c) for “paragraph 3 or 4 of Schedule 23A to the Taxes Act” substitute “Chapter 9 of Part 15 of ITA 2007”.

14Amendment of regulation 31 (returns of information by account manager)

(1)

Amend regulation 31f1 as follows.

(2)

In paragraph (1) for “and (5)” substitute “, (5) and (7)”.

(3)

Omit paragraph (2).

(4)

In paragraph (4)(a) for paragraph (iv) substitute—

“(iv)

units in an authorised unit trust,”.

(5)

In paragraph (4)(a) for paragraph (vi) substitute—

“(vi)

shares in an open-ended investment company,”.

(6)

In paragraph (4)(a) for paragraph (via) substitute—

“(via)

the surrender value of life insurance policies which satisfy the condition of regulation 7(15),”.

(7)

In paragraph (4) for sub-paragraph (b) substitute—

“(b)

the respective market values at the end of the year or the part of the year for which the return is made of account investments held under cash components, by him or a nominee for him on behalf of account investors, under all the accounts in respect of which he acted as account manager in that year or part, with separate values for—

(i)

cash, including cash represented in share accounts with building societies,

(ii)

the surrender value of life insurance policies which do not satisfy the condition in regulation 7(15), and

(iii)

investments (other than those specified in paragraphs (i) and (ii)) which do not satisfy the condition in regulation 7(15); and”.

(8)

Omit paragraph (6).

(9)

In paragraph (7)—

(a)

for the words from the beginning to “for which the return is made, as to” substitute—

“The information specified in this paragraph is information relating to all accounts to which subscriptions were made in the year or part of the year, in respect of which he was acting as account manager immediately before the end of the year or part of the year for which the return is made, or in the case of an account that was closed during the year, in respect of which he was acting as manager at the date the account was closed, as to”;

(b)

in sub-paragraph (b) for “quarter or other period” substitute “year or part of the year”.

15Amendment of regulation 34 (capital gains tax – adaptation of enactments)

(1)

Amend regulation 34f1 as follows.

(2)

In paragraph (2)(a), in the notionally added subsection (12)(b)(iii) of section 106A of the Taxation of Chargeable Gains Act 1992f2, for “employee share ownership plan” substitute “SIP”.

(3)

In paragraph (2)(a), in the notionally added subsection (13) of section 106A of the Taxation of Chargeable Gains Act 1992, for paragraph (c) and the word “and” immediately preceding it substitute—

“(c)

“approved SIP” and “ceased to be subject to the plan” shall be construed in accordance with the SIP code (see section 488(3) of ITEPA 2003); and

(d)

“plan shares”, in relation to an approved SIP, shall be construed in accordance with the SIP code (see section 488(3) of ITEPA 2003) except that—

(i)

paragraph 87(6) of Schedule 2 to ITEPA 2003 (meaning of the word “shares” in the context of company reconstructions) shall not apply, and

(ii)

in paragraph 88(2) of that Schedule (treatment of shares acquired under rights issue) the words “or securities or rights” shall be treated as omitted.”.

16Amendment of regulation 35 (administration of tax in relation to accounts – supplementary)

(1)

Amend regulation 35f1 as follows.

(2)

In paragraph (5)(a) for “sections 95 and 96” substitute “section 95”.

(3)

In paragraph (6)(a) for “Chapter 2 of Part 13 of the Taxes Act” substitute “Chapter 9 of Part 4 of ITTOIA 2005”.

(4)

For paragraph (7) substitute—

“(7)

A termination of a policy of insurance pursuant to regulation 9(3)(b)(ii) shall be treated as the surrender of all rights under the policy for the purposes of section 484(1)(a)(i) of ITTOIA 2005.”.

17Amendment of regulation 36

(1)

Amend regulation 36 as follows.

(2)

In the title to the regulation after “Taxes Act” insert “and of Chapter 9 of Part 4 of ITTOIA 2005”.

(3)

In paragraph (2)(b) for “within the meaning given by section 540 of the Taxes Act” substitute “falling within section 484(1) of ITTOIA 2005”.

(4)

In paragraph (3) after “Taxes Act” insert “and of Chapter 9 of Part 4 of ITTOIA 2005”.

(5)

For paragraph (4) substitute—

“(4)

Section 530 of ITTOIA 2005 does not apply to a gain in a case in which paragraph (1) applies.”.

(6)

In paragraph (5) for “section 550 of the Taxes Act” substitute “section 535 of ITTOIA 2005”.

Signature

Dave Watts

Alan Campbell

Two of the Lords Commissioners of Her Majesty’s Treasury

12th March 2008

Explanatory note

(This note is not part of the Regulations)

These Regulations amend the Individual Savings Account Regulations 1998 (S.I. 1998/1870) (the “principal Regulations”).

The vast majority of the amendments have been made to ensure that the detailed wording of the principal Regulations takes account of legislation that has come into force after the principal Regulations came into force: notably the Income Tax (Earnings and Pensions) Act 2003 (c. 1), the Income Tax (Trading and Other Income) Act 2005 (c. 5), the Income Tax Act 2007 (c. 3) and the Authorised Investment Funds (Tax) Regulations 2006 (S.I. 2006/964).

A number of other amendments have also been made to the principal Regulations. Regulation 12 of the principal Regulations has been amended to make it easier for account managers to keep information relating to applications to subscribe to an account; and regulation 31 of the principal Regulations has been amended so that some information which previously had to be provided quarterly now only has to be provided yearly.

A full regulatory impact assessment has not been produced for this instrument as no impact on the private or voluntary sectors is foreseen.