Individual Savings Account and Child Trust Funds — (Amendment) Regulations 2025
Published 24 June 2025
© Crown copyright 2025
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/individual-savings-account-and-child-trust-funds-amendment-regulations-2025/individual-savings-account-and-child-trust-funds-amendment-regulations-2025
Who is likely to be affected
Savers with Individual Savings Accounts (ISA) or Child Trust Funds (CTF).
Banks, building societies and other financial institutions who provide or manage these accounts or investments.
General description of the measure
This measure will allow recognised funds within the Temporary Marketing Permissions Regime (TMPR) at the start of the transitional period to remain as ISA and CTF qualifying investments until 1 January 2027.
This measure will include Long Term Asset Funds (LTAFs) within the qualifying investment types for the Innovative Finance ISA.
This measure will also require ISA managers to obtain a National Insurance number from all investors who are eligible to have one, when receiving a subscription an ISA from 6 April 2027.
In addition, the measure will update the rules relating to withdrawals of a current year ISA subscription from a flexible account.
Policy objective
The measure supports savers and ensures that children and their families continue to have access to suitable tax-advantaged savings products that meet their needs.
Allowing recognised funds which were within the TMPR at the start of the transitional period to remain as ISA and CTF qualifying investments until 1 January 2027 will provide certainty to investors, ISA managers and CTF providers on the treatment of qualifying recognised funds during the transitional period.
Including LTAFs within the qualifying investment types for the Innovative Finance ISA will allow investors at all income levels to save and invest in ways which best meet their needs.
Requiring a National Insurance number to be provided where an individual is eligible for one from 6 April 2027, will enable improved HMRC compliance activity around ISA subscription limits as it will help identify individuals subscribing to an ISA, and is consistent with the requirement for Lifetime ISAs. Legislating for this requirement now allows ISA managers time to source missing or incomplete customer information in advance of the change.
Changes to the rules relating to withdrawals of a current year ISA subscription from a flexible account will allow individuals to subscribe withdrawn funds to another ISA within the same tax year, with no additional restrictions on the ‘replacement’ of those funds.
Background to the measure
At Autumn Budget 2024, the government announced that the digitalisation of ISA reporting would be mandatory for all ISA managers from 6 April 2027.
Detailed proposal
Operative date
The element which relates to National Insurance numbers will have effect from 6 April 2027. The elements relating to recognised funds, LTAFs and flexible ISAs will have effect from 2 July 2025.
Current law
The ISA rules are set out in the Individual Savings Account Regulations 1998 (SI 1998/1870) (ISA Regulations), which are made under powers in Chapter 3 of Part 6 of the Income Tax (Trading and Other Income) Act 2005 and section 151 of the Taxation of Chargeable Gains Act 1992.
The CTF rules are set out in the Child Trust Funds Regulations 2014 (SI 1450/2004) (CTF Regulations) which are made under the Child Trust Funds Act 2004.
The ISA and CTF Regulations specify the types of investments eligible to be held in an ISA or CTF account. One such condition is that funds must be recognised on the Financial Services Register.
ISA regulations also specify the information which must be provided to open an account and provide the rules which apply to the operation of flexible accounts.
Proposed Revisions
The ISA and CTF Regulations will be amended to allow funds which were ‘recognised funds’ within the TMPR at the start of the transitional period to remain as ISA qualifying investments until 1 January 2027.
The ISA Regulations will be amended to define LTAFs as a separate, qualifying investment type for the innovative finance ISA.
The ISA Regulations will be amended to provide that, from 6 April 2027, where a new ISA subscription is made by an investor the ISA manager must obtain a National Insurance number from the investor or confirmation that the investor is not eligible to have a National Insurance number before an account can be subscribed to.
The ISA Regulations will also be amended to ensure that where current year subscriptions are withdrawn from a flexible account, the amount subscribed in the tax year is reduced by the amount withdrawn. Any withdrawal amount exceeding the amount subscribed in the current year will be treated as a previous year subscription. In addition, replacement of a previous year’s subscriptions may only be made to the account from which the cash withdrawal was made.
Summary of impacts
Exchequer impact (£ million)
| 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 |
|---|---|---|---|---|---|
| Empty | Empty | Empty | Empty | Empty | Empty |
The final costing will be subject to scrutiny by the Office for Budget Responsibility and will be set out at a future fiscal event.
Economic impact
The measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
These measures will impact individuals who wish to continue to invest in funds that qualified as ‘recognised funds’ within the TMPR at the start of the transitional period. The measure will allow individuals who wish to invest in LTAFs to do so in an innovative finance ISA. Individuals will continue to be able save and invest in ways which best meet their needs.
These measures are not expected to impact on family formation, stability or breakdown.
An individual’s customer experience is expected to be unchanged as the changes to qualifying investments, and to the operation of flexible accounts, will not change any processes or tax administration obligations.
Individuals who are eligible for a National Insurance number but do not know their number will need to obtain it before they are able to subscribe to an ISA. This is in line with the procedure for claiming benefits and other government services. Individuals can utilise existing online support and guidance where needed.
The number of UK individuals who could subscribe to an ISA who are not eligible for a National Insurance number is likely to be a very low and limited, broadly, to those who have never worked, been part of a child benefit claim, applied for a student loan, or claimed a benefit. Those individuals will continue to be able to subscribe to an ISA once they have confirmed their ineligibility for a National Insurance number to their chosen ISA manager.
Equalities impacts
An individual may be impacted by this measure regardless of their protected characteristics. If a protected group is overrepresented in this population, then it will be disproportionately impacted. HMRC does not currently hold data on the protected characteristics of individuals impacted by this measure and so cannot determine conclusively if there are any equality impacts.
Impact on business including civil society organisations
The measure will have a negligible impact on approximately 550 ISA and CTF managers, who, depending on their business model and regulatory permissions, choose to offer ‘recognised funds’ in their ISA or CTF products, or LTAFs in their ISA products.
The clarification of the rules relating to the operation of flexible accounts is expected to have a negligible administrative impact on ISA managers who choose to operate flexible accounts.
One-off costs for ISA and CTF managers will include familiarisation with the changes to ensure they are compliant and changes to supporting business processes. Some ISA managers will be required to update their ISA transfer forms and processes where they are not compliant with the new National Insurance number requirements. There is expected to be negligible ongoing administrative costs for ISA managers to confirm that individuals who have not provided a National Insurance number when subscribing to an ISA are not eligible for one.
This measure is expected overall to negatively affect businesses’ experience of dealing with HMRC as it will require ISA managers to collect a National Insurance number from all eligible investors who wish to subscribe to an ISA if they don’t already hold one on file, or confirm that the investor is not eligible for a National Insurance number.
These measures are not expected to impact on civil society organisations.
Operational impact (£ million) (HMRC or other)
The overall additional costs for HMRC in implementing these changes are expected to be negligible. These are restricted to updating the ISA and CTF Manager Guidance and confirming the changes with the ISA and CTF industry.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be kept under review through communication with affected taxpayers and the financial services industry.
Further advice
If you have any questions about this change, contact Claire Cornell Johnson on 03000 200 3300 or email: savings.audit@hmrc.gov.uk.
Declaration
Emma Reynolds MP, Economic Secretary at His Majesty’s Treasury has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.