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Guidance Notes
for ISA Managers
DRAFT
Crowdfunding
Chapters / paragraphs with no amendments have been omitted
04/2016
These notes provide general guidance for ISA managers on how to operate the ISA
schemes. They replace all previous HM Revenue & Customs guidance.
The notes are not binding and do not affect any persons right of appeal. Nor are they a
full statement of the law as it applies to ISA managers. ISA managers should refer to the
relevant legislation where appropriate.
04/2016
Updates
This version of the ISA Guidance Notes for Managers provides guidance on the rules to be applied
from 1 November 2016, and in particular incorporates guidance on debentures offered by
crowdfunding platforms to be eligible for inclusion within an ISA.
04/2016
Contents
1.
INTRODUCTION
What is an ISA?
What was a PEP?
Who are the Guidance Notes for?
HMRC contact addresses and phone numbers
How the ISA scheme works
The legislation
Investor enquiries
2.
3.
5.1
5.5
5.7
5.8
5.24
ISA SUBSCRIPTIONS
Subscription limits
Cash subscription
Subscription by transfer of shares
Subscriptions that do not count towards the annual subscription limits
Flexible ISAs
Help to Buy ISA reinstatement
Additional permitted subscriptions following the death of account holder
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4.1
4.9
4.18
4.24
4.29
4.32
4.35
4.38
4.39
4.42
OPENING AN ISA
6.
3.4
3.14
3.17
3.21
5.
2.1
2.13
2.24
THE INVESTOR
4.
1.1
1.2
1.3
1.5
1.11
1.18
1.19
6.1
6.6
6.19
6.51
6.77
6.92
6A
Contents
7.
8.
CASH ISAS
9.
10.1
10.3
10.7
10.15
10.32
10.38
10.40
10.45
10.47
10.47a
10.48
10.56
10.59
10.60
TRANSFERRING AN ISA
Transferring an ISA
ISA subscriptions after transfer
Claims for payment of tax
Cancellation of a transfer
Flexible ISA transfers
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9A.1
9A.5
9A.11
9A.12
MANAGING AN ISA
11.
9.1
9.2
9.14
9.18
9.26
10.
8.1
8.6
Qualifying investments
Policies of life insurance
Connected policies
Loans
Voiding and removing policies of life insurance in ISAs
9A.
7.1
7.56
7.60
7.62
7.68
7.71
7.74
7.76
11.1
11.20
11.30
11.33
11.34
Contents
12.
CLOSING AN ISA
13.
14.
12.1
12.7
12.23
13.1
13.5
13.8
13.10
13.38
13.41
RETURNS OF INFORMATION
14.1
14.3
14.4
14.6
Submission of returns
Penalties
14.19
14.22
15.
16.
17.
16.1
16.3
16.5
16.8
16.9
16.10
16.12
Introduction
Before the inspection
The inspection
After the inspection
Breaches in the ISA rules
Strict treatment of breaches in the ISA rules
Simplified voiding
04/2016
15.1
15.2
15.4
15.6
15.7
15.11
15.12
17.1
17.7
17.9
17.19
17.24
17.28
17.38
Contents
Audit protection
Breaches outside audit
Simplified voiding flow chart
18.
19.
04/2016
21.1
21.2
21.3
21.4
21.5
21.6
21.7
21.8
SUBSCRIPTIONS TO A JISA
23.
20.1
20.2
20.3
20.4
20.5
20.6
20.7
20.8
20.9
20.10
20.11
20.12
20.13
20.14
22.
19.1
19.2
19.3
19.4
JISA APPLICATIONS
21.
18.1
18.2
18.3
TYPES OF JISA
20.
17.58
17.61
17.64
22.1
22.2
22.3
22.4
22.5
22.6
22.7
22.8
Contents
24.
25.
28.1
28.2
30.
27.1
RETURNS OF INFORMATION
Overview
Reporting at age 18
29.
26.1
26.2
26.3
26.4
26.5
26.6
26.7
28.
25.1
25.2
25.3
25.4
25.5
25.6
25.7
25.8
25.9
25A
27.
24.1
24.2
24.3
24.4
24.5
24.6
24.7
TRANSFERRING A JISA
General
Internal transfer
External transfer
External transfer forms
Cancellation of a transfer
Refusal to accept an external transfer
Example of written external transfer application
External transfer phone applications
JISA external transfer form
Transfer of a CTF to a JISA
26.
23.1
29.1
AUDIT
Audit
30.1
APPENDICES
Appendix A
04/2016
Blank
9
Contents
Appendix B
Appendix C
Appendix D
04/2016
10
Chapter 1
Introduction
CHAPTER 1
INTRODUCTION
What is an ISA?
1.1
1.2
1.3 to 1.4
1.5 to 1.7
1.11 to 1.17
The legislation
1.18
Investor enquiries
1.19 to 1.20
04/2016
11
Chapter 1
Introduction
04/2016
The Guidance Notes are for ISA managers. They provide guidance on how to
operate the ISA scheme. This version provides guidance on the rules to be applied
from 1 November 2016.
12
Chapter 6
ISA Subscriptions
CHAPTER 6
ISA SUBSCRIPTIONS
Subscription limits
6.1 to 6.5
Cash subscription
6.6 to 6.9
6.10 to 6.11
6.12 to 6.18a
6.19 to 6.24
Documentary evidence of shares from Schedule 3 SAYE option scheme, 6.25 to 6.30
approved profit sharing schemes, and Schedule 2 Share Incentive Plans
Time limit for transfer of shares from Schedule 3 SAYE option scheme, 6.31 to 6.34
approved profit sharing schemes and Schedule 2 Share Incentive Plans
Matching offer arrangements
6.35
Valuation of shares transferred from Schedule 3 SAYE option schemes, 6.36 to 6.40
approved profit sharing schemes or Schedule 2 Share Incentive Plans
Company reconstructions
6.41 to 6.42
Stock dividends
6.43
6.51 to 6.56
6.77 to 6.85
6.92
04/2016
6A
13
Chapter 6
ISA Subscriptions
6.18a
Peer-to-peer loans and crowdfunding debentures held outside of the ISA wrapper
cannot be sold, and repurchased inside an innovative finance ISA except where the
loans are available for purchase, at the same price, by any lender in the open
market (see paragraph 9A.8).
6A
6A.10
Where a surviving spouse inherits non-cash ISA assets, these may be used to
make an additional permitted subscription in specie (without having to be sold and
the subscription made in cash) provided these assets were the ones held at the
date the manager was notified of the death of the investor. The option of an in
specie subscription is not available if the spouse decides to make additional
permitted subscriptions to a manager other than the one who held the ISA of the
deceased.
Non-cash assets are
any stocks and shares ISA qualifying investments other than cash deposits
the following cash ISA qualifying investments
o National Loans Act securities
o depositary interests
o short-term money market funds
o money market funds
any innovative finance ISA qualifying investments other than cash
investments (see paragraph 9A.10)
Only inherited non-cash ISA assets can be used to make an additional permitted
subscription in specie. For non-innovative finance ISA assets title to those assets
must have remained with the ISA manager or his nominee. If title has moved from
the ISA manager or his nominee, the assets cannot used to make an additional
permitted subscription. The subscription must be made in cash instead. For
innovative finance assets, the peer-to-peer loans agreements and crowdfunding
debentures must have remained under the management of the deceaseds ISA
manager at all times.
For stocks and shares ISAs, the value of the assets at the time the additional
permitted subscription is made counts towards the additional permitted
subscription limit (the value of the deceaseds ISA at their date of death). The
assets should be valued in accordance with paragraphs 10.20 10.22a. Where
shares held by the deceased have gone x-dividend (XD), the value of the
dividend payments should be included in the value of the shares. Innovative
finance ISA non cash assets should be valued at their date of death value, that is,
the capital amounts outstanding plus interest due on the loans(s) but unpaid at the
date of death.
The additional permitted subscription limit is not affected by any change in asset
value during the administration period, so if the value of the assets increase during
administration it will not be possible to subscribe them all to the ISA unless
04/2016
the deceased held a combination of ISAs with the same manager and the
surviving spouses single combined additional permitted subscription limit
with that manager (see paragraph 6A.3(i)) is sufficient to frank the increase
in value
14
Chapter 6
ISA Subscriptions
04/2016
15
Chapter 9A
CHAPTER 9A
INNOVATIVE FINANCE ISAs
9A.1
Qualifying investments
9A.5 9A.10
Peer-to-peer loans
9A.6
Crowdfunding Debentures
9A.9
Cash
9A.10
9A.11
9A.12
04/2016
16
Chapter 9A
CHAPTER 9A
Qualifying investments
9A.5
Crowdfunding Debentures
9A.9
Crowdfunding debentures are those provided for in the Individual Savings Account
(Amendment No. 3) Regulations 2016 which extends the range of investments that
can be held in an innovative finance ISA. These are:
9A.9a
9A.9b
be transferable
create indebtedness
be facilitated by a person with FCA permissions to arrange deals in
investments
be made through an electronic system operated by that person in the EEA
The ISA investor must be treated as the client of the person operating the
crowdfunding platform (or a person acting on behalf of the platform). This
arrangement offers the investor FCA regulatory protections and recourse to the
Financial Ombudsman.
The platform (or the person acting on their behalf) must receive payments, make
payments and exercise (or facilitate the exercise of) rights under or in respect of the
debentures.
9A.9c
9A.9d
Within the meaning given in section 170 of ITA 2007 the investor must not be
connected with the issuer of the debenture. The investment must not be connected
to any other investment held outside the ISA wrapper. Investments made available
to an investor solely by reason of their employment or position within an issuing
company or charity are excluded from eligibility as a qualifying debt security.
04/2016
17
Chapter 9A
04/2016
18
Chapter 11
Transferring an ISA
CHAPTER 11
TRANSFERRING AN ISA
Transferring an ISA
11.1 to 11.11
11.12 to 11.15
Transfer applications
11.15a
Internal transfers
11.15b
11.15c to 11.15e
11.16 to 11.17
11.18
Date of transfer
11.18a to 11.18c
11.19
Bulk transfers
11.19a to 11.19c
Group transfers
11.19d
11.20 to 11.21
11.22 to 11.29
Claims for payment of tax in respect of income paid after the transfer date 11.30 to 11.32
Cancellation of a transfer
11.33
11.33a
11.33b
11.34
04/2016
19
Chapter 11
Transferring an ISA
Transferring an ISA
What amounts can be transferred?
11.12
all of the current years ISA subscriptions, the investments bought with those
subscriptions, and any income arising on those investments (current year
account),
and/or
some or all of the previous years ISA subscriptions, the investments bought
with those subscriptions, and any income arising on those investments (prior
years account).
In the case of an innovative finance ISA this means that a transfer of the cash is not
possible unless all the current year subscriptions are transferred, that is, by
liquidating the peer-to-peer loans and crowdfunding debentures or transferring in
specie.
04/2016
20
Appendix C
CHAPTER 12
CLOSING AN ISA
12.6a
12.7 to 12.10
12.11 to 12.14
12.14a
12.15 to 12.15a
12.16 to 12.22
04/2016
12.1 to 12.6
12.23 to 12.25
12.26 to 12.29
12.30 to 12.33
12.34 to 12.35a
12.36
12.37
12.38 to 12.40
12.41 to 12.46
Voiding
12.47 to 12.49
12.50 to 12.51
12.51a
12.52 to 12.54
21
Appendix C
12.15a
Subject to the ISA terms and conditions, ISA managers should advise the
personal representatives that they have the choice of having the ISA investments
transferred to them (or a beneficiary) or of the ISA manager selling the ISA
investments and paying the proceeds to them (but see paragraph 9.2 regarding
ISA policies of life insurance).
ISA managers should also advise personal representatives that non-cash ISA
assets inherited by a surviving spouse or civil partner can only be used to make
in specie additional permitted subscriptions provided
04/2016
for non-innovative finance ISA assets, the title to those assets has
remained with the ISA manager or his nominee (see paragraph 6A.10),
and
22
Appendix C
CHAPTER 15
ANNUAL RETURNS OF STATISTICAL INFORMATION (MARKET VALUE)
The requirement to make a market value return
15.1
15.2 to 15.3
15.4 to 15.5
15.6
15.7
15.8
Cash ISAs
15.9
15.10
15.11
Penalties
15.12
04/2016
23
Appendix C
the securities
the securities
04/2016
24
Appendix C
04/2016
cash
25