Guidance

ISA manager bulletin 76

Published 27 February 2018

1. Continuing Accounts of Deceased Investors – End of Year reporting

As reported in Individual Savings Account (ISA) manager bulletin 75, regulations were laid on 14 November 2017 extending ISA tax advantages after the death of an account investor on or after 6 April 2018. The regulations modified the information ISA managers are required to provide as part of a bulk transfer process and when making end of year returns to HM Revenue and Customs (HMRC). The modification required ISA managers to provide the name and address of the personal representative in respect of a continuing ISA, rather than the name and address of the deceased investor.

Following representations from ISA managers and discussions with industry bodies, HMRC has agreed that these modifications will not apply. ISA managers should continue to report the name and address of the deceased investor in respect of continuing accounts of deceased investors. The ISA regulations and guidance will be updated in due course to reflect the new position.

2. Junior ISA subscription limits

As announced at Autumn Budget 2017, from 6 April 2018 the Junior ISA subscription limit will increase to £4,260.

3. Lifetime ISA

Lifetime ISAs started on 6 April 2017 and are approaching the end of the first year of operation. ISA managers that offer Lifetime ISAs should now move to reporting to HMRC in the same way. Lifetime ISA managers have raised queries with HMRC and the purpose of this bulletin is to provide answers to some of those queries.

4. Lifetime ISA manager approval

HMRC granted approval of ISA managers to offer Lifetime ISA following an assurance given to HMRC that their IT systems will enable them to submit the necessary reports using HMRC’s Application Programming Interfaces (API). If a Lifetime ISA manager cannot interact with HMRC via the API then Lifetime ISA accounts can’t be created by HMRC and government bonuses can’t be paid.

5. Bonus claim request and payment for 2017 to 2018

The first end of year bonus claim for 2017 to 2018 can only be made to HMRC via electronic reporting as per the API specification, which has been tested and is live. There’s no alternative manual process for making government bonus claims to HMRC.

6. Notifying HMRC of account and investor details

All approved Lifetime ISA providers must report existing account and investor details to HMRC no later than 28 February 2018.

From 28 February 2018, information about Lifetime ISA accounts opened, transferred or closed should be reported electronically as soon as possible to HMRC via the API.

This will enable HMRC to identify any errors in the information provided and it will allow sufficient time for the account provider/investor to correct these errors before the first bonus claims are made.

Lifetime ISA managers who report investor and account details to HMRC at the same time as claiming the 2017 to 2018 bonus will have a very short period of time to resolve any data errors so that their investors can receive the bonus on the due date.

Lifetime ISA managers who can’t meet the reporting deadline must contact Steve Minto or Karen Capaldi as soon as possible via e-mail. An explanation of the errors that can occur when reporting details of investors/accounts to HMRC is set out below.

7. Creating the Lifetime ISA investor ID

To create an investor record the personal details the Lifetime ISA investor obtained by a Lifetime ISA manager must match the details held by HMRC. If they don’t match, HMRC will unable to pay the government bonus due to the investor. HMRC’s initial checks investor data has found that 4% of create Lifetime ISA investor requests are failing. This mainly because of the surname or surname spelling provided to HMRC is incorrect.

If data errors cannot be corrected, HMRC will need investors to check the personal details held by HMRC. Investors will need to check what HMRC records have for their first name, surname, date of birth and Lifetime ISA investors must have a valid UK National Insurance Number (NINO). A Temporary NINO (TN prefix) or an Isle of Man NINO (MA prefix) is not acceptable. An investor who doesn’t have a valid UK NINO must apply for a UK NINO before they can open a Lifetime ISA and be eligible for any government bonus.

Investors can check their personal details held by HMRC by:

1. logging into their personal tax account
2. telephone the HMRC helpline
3. writing with their details to HMRC at:

Pay as you earn and self-assessment
HM Revenue & Customs
BX9 1AS
United Kingdom

Investors can tell HMRC update their personal details by using the Tell HMRC your name has changed service, on their Personal Tax Account. Investors who have a Personal Tax Account can log into their account at any time to check the progress of the changes that they have told HMRC about.

8. Creating a Lifetime ISA Account

HMRC will return an error response to Lifetime ISA managers for the following reasons:

1. An investor is not eligible for a Lifetime ISA because they aren’t within the statutory age limits at the time they made their first payment into their account. This happen if an investor’s date of birth with HMRC shows that they aren’t entitled to open a Lifetime ISA. The Lifetime ISA will have to be closed unless the investor has provided evidence that their date is correct.
2. An investor is not eligible for a Lifetime ISA because HMRC has received information that the individual is deceased. This may occur where an investor dies after making their initial payment to open their Lifetime ISA, but the Lifetime ISA manager has not been informed of the death. The account manager must contact the HMRC project team immediately to enable a bonus payment to be made.
3. An investor already has a current year Lifetime ISAs with another ISA manager with an earlier date of first payment. The investor will have to make request to transfer of their first Lifetime ISA to their new ISA manager.
4. HMRC voids an account because an earlier Lifetime ISA account already exists, HMRC will notify the Lifetime ISA manager that the claim for a government bonus has been rejected. Lifetime ISA managers will need to tell their investor why their government bonus has not been paid.

If an investor doesn’t confirm that their personal details are correct a Lifetime ISA manager, can decide to close the investor’s account. An account will not receive a government bonus until the identity, eligibility and compliance checks are completed. Any issues that continue into the next tax year will not prevent a government bonus being claimed retrospectively when the issues have been resolved.

9. Reporting a transferred Lifetime ISA

A Lifetime ISA manager who accepts a transfer of a Lifetime ISA from another manager will be responsible for reporting the transferred account to HMRC and should make sure that all of the required information is included within the return.

When a request to the API fails, for example, because the previous account ID does not exist or match, a new Lifetime ISA should be created using the date of first payment provided by the exporting Lifetime ISA manager on the transfer history form.

Only the receiving Lifetime ISA manager is required to report the transferred account to HMRC via the API, not the exporting Lifetime ISA manager.

10. Reporting and payment deadlines

Following discussions and systems testing with Lifetime ISA managers and prospective managers, HMRC has agreed to amend the ISA regulations to relax the deadlines for Lifetime ISA managers to submit annual returns and pay any withdrawal charges due.

The existing deadline for the annual returns is 14 days, which differs from the deadline for other ISAs. The amended deadline will mirror that for all other ISAs and will be set at 60 days. The existing deadline for the payment of withdrawal charges is also 14 days. This will be amended to 28 days.

The amendment will also provide the power for HMRC to authorise an extension to the 60 day deadline for Lifetime ISA annual returns of information, where necessary.