Guidance

Find out about annual returns and tax claims for ISA managers

Use this guidance to find out what information you need to provide and what forms to use for your annual return.

What managers can claim

Managers, other than managers who are insurer managers, can claim UK income tax deducted from income in respect of ISA investments from HMRC.

Interest payment and interest distributions

Managers receiving interest distributions from corporate bond funds should normally be receiving them without deduction of income tax.

Finance Act 2002 increased the number of tax-exempt bodies entitled to receive interest without deduction of income tax ‘if at the time the payment is made, the company making the payment reasonably believes that one of the conditions in Section 349B Income and Corporation Taxes Act (ICTA) 1988 is satisfied’.

The payer has no choice in the matter, where it ‘reasonably believes’ the recipient is in one of the gross payment categories it must pay the interest without deduction of income tax.

ISA managers are one of the gross payment categories. As a result of this, companies paying interest to ISA managers should pay the interest without deduction of income tax where the manager operates a single nominee where all the underlying beneficial holders are eligible to receive gross interest - because, for example, they’re all ISA investors.

If the manager operates a mixed or pooled nominee in which there is a mixture of beneficial holders - some entitled to gross interest - because, for example, they’re ISA investors - and others not so entitled – the payer will pay the interest after deduction of income tax and the manager will have to claim the tax in respect of the ISA investors from HMRC.

Any ISA manager that operates a single nominee in which all the underlying beneficial holders are eligible to receive gross interest, but receives interest distributions from corporate bond funds after deduction of tax should contact the payer to ensure that interest is paid without deduction of income tax in future.

Property income distributions

UK-REITs make Property Income Distributions (PID), which normally have basic rate tax deducted at source.

Where a PID is paid directly to an ISA manager it will be paid gross where the manager both:

  • operates separate nominee accounts – one for those beneficial owners entitled to gross payment - because, for example, they’re ISA investors - and one for others not so entitled

  • gives the registrar acting for the UK-REIT a declaration of entitlement to gross payment in respect of the ‘gross account’

If the manager operates a mixed or pooled nominee, or does not give the registrar a declaration of entitlement to gross payment in respect of the ‘gross account’, the PID must be paid after deduction of income tax at the basic rate.

As an interim measure, managers receiving a PID net can reclaim the tax in respect of their ISA investors from HMRC.

Managers will have to make adjustments in relation to PID where the ISA has been made void or where the investor has died. Again, as an interim measure the treatment of PID will be aligned with the existing arrangements for corporate bond interest payments. This means that:

  • where the manager is using an undesignated mixed nominee account, the PID will be received net of basic rate tax and the manager will then reclaim the tax in respect of ISA investments from HMRC - where adjustments are required for deceased and void cases the basic rate tax should be deducted by the manager and repaid to HMRC by adjustment of their next claim

  • where the manager has received the PID gross and later adjustments are required for deceased and void cases, the manager should make not make deductions but should instead notify the estate or the holder of the void ISA that they’re responsible for accounting for tax on the payment

Insurer managers and insurers that provide policies to other ISA managers

ISA managers who are insurer managers (and insurers that provide ISA policies to other ISA managers) can claim UK tax deducted and foreign withholding tax from income referable to ISA business from their tax office.

Guidance for insurers will be included on the claim form R19 and in the notes sent out with a CT61 return form.

How to claim

Claims to HMRC in line with what managers can claim must be made on either:

Claims must be signed by an authorised officer of the manager. Employees of an administration company used by the manager delegation of manager’s functions may not sign a claim on behalf of the manager unless they’re an authorised officer of the manager.

Where HMRC is satisfied with the claim they’ll pay the sum claimed, through the Bankers Automated Clearing Services Ltd (BACS) system, direct to the manager’s bank account.

Where claims are received on or before the last working day of a calendar month HMRC will aim to pay them on the 17th of the following month.

Where the 17th falls on a weekend or public holiday HMRC will make payment on the next working day.

Any claims not processed in time for payment on 17th of the month will be paid on 17th of the next month.

Information to be supplied before claims are made

Before managers make their first claim they should provide HMRC Repayments with the following information:

  • the full name and status of up to five individuals appointed by a resolution of the manager’s board or equivalent managing body to sign claims on behalf of the manager - only one signature is required on each claim

  • a copy of the resolution of the board or equivalent managing body appointing each signatory

  • an original specimen signature of each signatory

Managers may include signatories described in terms of the post held, such as ‘the Finance Director for the time being’, in their list of authorised signatories.

When the post holder changes, an authorised signatory will have to provide details - name and specimen signature - of the new post holder - see amending information supplied, but this does not need to be supported by a resolution of the manager’s board or equivalent managing body.

Existing managers who wish to adopt this approach should notify HMRC. The notification should set out the changes to the list of authorised signatories as a result of describing some, or all, in terms of the posts held.

It should be signed by an authorised signatory and be supported by details and specimen signatures of current post holders and a resolution of the manager’s board or equivalent managing body.

You must include the following bank account details:

  • the full name and address of the branch of the bank to which the payments are to be made

  • the sort code of the branch

  • the account number

  • any special form of identification given to the account - such as deposit, special deposit, number 2

  • an account name for use by BACS - the name must not exceed 18 characters, including spaces.

Amending information supplied

Where any of the information provided subsequently changes, managers should inform HMRC Repayments in writing. Failure to do so could lead to a delay in making a payment.

Details of signatories to claims

HMRC Repayments must be notified of any change to authorised signatories. The request must come in paper format from a current authorised signatory and be counter signed by a second authorised signatory.

Where a signatory is to be added to the current list of authorised signatories, or is replacing a current authorised signatory, the authorised signatories should send HMRC Repayments a sample of the new signatory’s signature.

Once we have made the change we will send confirmation, either by email or letter, to all authorised signatories for that company.

Bank account details

Where the nominated bank account is being changed, the request must come in paper format from an authorised signatory and be counter signed by a second authorised signatory.

The request should include details of the new account to which the payments are to be made (see information to be supplied before claims are made), supported by either:

  • a paying-in slip

  • a bank statement

Once we have made the change we will send confirmation, either by email or letter, to all authorised signatories for that company.

Basis of annual returns and tax claims

All managers must make an annual return and claim. This is the case even where the manager has not claimed any repayment for the year. Managers may also make interim claims, for one or more tax months.

Interim claims – form ISA 10

Managers should make interim claims on form ISA 10. Paper copies will not be provided.

Interim claims are made in respect of income with a payment date falling in one or more tax months. They may cover a maximum of 6 tax months provided all those months fall in the same tax year. A tax month begins on the 6th of one calendar month and ends on the 5th of the following calendar month.

Managers must hold tax vouchers for all amounts included in the claim.

Interim claim forms include provision for managers to pay back amounts claimed and received from HMRC that are either:

The interim claim form also includes provision for managers to account for both:

  • the flat rate charge (where this applies before 1 July 2014) on interest paid on cash on deposit in stocks and shares ISAs

  • tax at the basic rate, on chargeable events in respect of ISA insurance policies

HMRC will not pay an ISA 10 interim claim where any return has not been completed by the due date.

This means HMRC will not pay an interim claim:

HMRC will not normally pay interim claims of less than £50.

Where HMRC is not satisfied with a claim they’ll pay any lower amount which they estimate is due. There is no right of appeal against a decision on an interim claim.

Where, as a result of making an interim claim, there is a net amount due to HMRC, the manager must report this to HMRC by entering the amount in Box G on the form ISA 10.

HMRC will write to the ISA manager explaining how this amount can be repaid by BACS. The BACS payment must include the unique payment reference number contained in the letter from HMRC.

Do not send a cheque to HMRC

Where a manager receives a tax voucher late they should make a claim for the tax month in which the payment date fell - or a supplementary interim claim if they’ve already made an interim claim for that tax month – see below.

A claim for tax in respect of such a payment may be included in the manager’s next interim claim provided each of the following apply:

  • the period of the claim from the 6th of the month in which the payment was made to the 5th of the month of the next claim, does not exceed 6 months

  • the date of the payment does not fall in a previous tax year -see below

  • the manager keeps a record of such cases for reconciliation purposes which should be made available on request to HMRC auditors

If the date of the payment falls in a previous tax year the manager should include the payment in the annual return and claim for the tax year in which the payment fell.

Managers may make a supplementary interim claim at any time within the tax year if it is discovered that the original claim contained an error or mistake.

Completing form ISA 10

ISA Manager reference

Managers should enter their ISA reference number allocated to them by HMRC. This will always be the letter Z followed by 4 numeric characters.

Name of ISA Manager

Managers should enter the legal name under which they’ve received approval. The manager’s trading name must not be entered.

Name of ISA Scheme

Enter the name of the scheme if this is different to the Manager named above.

Period of Claim

This will normally be a tax month beginning on the 6th of one calendar month and ending on the 5th of the following calendar month. However the period of claim can be for up to 6 tax months within a single tax year.

Part 1 - Amount claimed

In Box A, enter the amount of any tax deducted at source from interest arising on investments held in ISA accounts.

Part 2 - Amounts payable

In Box B, enter the total of any amounts previously claimed and subsequently found not to be due. For example sums arising in respect of void subscriptions or where payment occurred after the death of the investor.

In Box C, enter details of tax deducted at the basic rate from chargeable events.

Box D applies only where interest was paid on cash on deposit held in a stocks and shares ISA before 1 July 2014 - see the archived guidance notes that applied before 6 April 2016.

Part 3 - Reconciliation

Managers should enter the final amount claimed in Box F (this is the tax claimed in Box A less any tax adjustments in Box E). Where the net result is that the manager still owes monies to HMRC, enter the amount due in Box G. HMRC will write to the ISA manager explaining how this amount can be paid by BACS. The BACS payment must include the unique payment reference number contained in the letter from HMRC.

Do not send a cheque to HMRC.

Certificate - Authorised signatory

The form ISA10 must be signed by an authorised signatory. This must be one of the persons already notified to HMRC - see information to be supplied before claims are made.

Annual return and claim – form ISA 14

Managers should make annual returns and claims on form ISA 14. Paper copies will not be provided.

Managers must return fully completed forms to HMRC by the following 5 October.

The annual return and claim relates to income with a payment date falling in the previous tax year ending on 5 April. It is therefore a consolidated claim covering any interim claims made for that tax year.

Annual return and claim forms include provision for managers to pay back amounts claimed and received from HMRC which are found not to be due either:

The annual return and claims form includes provision for managers to account for tax at the basic rate on chargeable events in respect of ISA insurance policies.

Where an annual claim exceeds the amounts paid on interim claims for that tax year and HMRC is satisfied with the claim, they’ll aim to pay the balance on the 17th of the month following the month in which the annual return and claim form is received.

If, on the other hand, the amounts already paid on interim claims exceed the amount shown on an annual return and claim, the manager should send a cheque for the amount due, with the form ISA 14, to HMRC Services Team 1. Cheques should be made payable to HMRC and crossed ‘A/C Payee’.

If the annual return and claim is not received by 5 October following its issue:

  • no further interim claims will be paid until the ISA 14 is fully completed and received by HMRC and

  • HMRC will review the payments made for the tax year for which the form ISA 14 is outstanding and will issue a notice showing the payments made and any lower amount which they consider ought to have been made

If the form annual return and claim (ISA 14) is not received within 14 days after the issue of the notice, the amount shown in the notice will become immediately recoverable by the Collector of Taxes.

HMRC may withdraw approval from the manager where an annual return and claim on form ISA 14 is not made.

If a manager does not manage any ISAs in a particular tax year, a NIL return and claim is required.

Managers may make supplementary annual returns and claims at any time within 4 years after the end of a tax year if it is discovered that the original return and claim contained an error or mistake.

Completing form ISA 14

Statement of income for stocks and shares ISAs:

  • dividends and dividend distributions - enter the gross amount of dividends and dividend distributions with a payment date during the tax year- do not include equalisation in respect of group 2 units received from an authorised unit trusts

  • interest payments and interest distributions - enter the gross amount of interest payments and interest distributions from ISA investments with a payment date during the tax year

  • interest on cash on deposit - enter the gross amount of interest paid or credited to the ISA during the tax year in respect of uninvested cash on deposit

Statement of income for cash ISAs:

  • interest payments and interest distributions - Enter the gross amount of interest payments and interest distributions from ISA investments with a payment date during the tax year

  • interest on cash on deposit - enter the gross amount of interest paid or credited to the ISA during the tax year in respect of uninvested cash on deposit, this includes interest on cash deposits held in a share account with a building society, interest on cash deposits held with a bank and interest on National Savings and Investments deposits

  • bonuses - enter the total bonus received

Statement of income for innovative finance ISAs:

The reporting form for 2016-17 and later years will be updated to include:

  • interest payments - enter the gross amount of interest payments with a payment date during the tax year

  • interest on cash on deposit - enter the gross amount of interest paid or credited to the ISA during the tax year in respect of uninvested cash on deposit. - this includes interest on cash deposits held in a share account with a building society, interest on cash deposits held with a bank and interest on National Savings and Investments deposits

ISA Manager reference

Managers should enter their ISA reference number allocated to them by HMRC. This will always be a letter Z followed by 4 numeric characters.

Name of ISA Manager

Managers should enter the legal name under which they’ve received approval. The manager’s trading name must not be entered.

Period of Claim

This will be the tax year beginning on 6th April in one year and ending on 5th April of the following year.

The period of the claim may be shorter where the manager is only approved part way through a tax year. In this case the period of the first annual claim will be from the date of approval to the following 5th April.

Part 1 - Amount claimed

Managers should enter the amount of tax deducted at source from interest arising on investments held in ISA accounts In Box A,

Part 2 - Amounts payable:

  • in Box B, enter the total of any amounts previously claimed and subsequently found not to be due, for example sums arising in respect of void subscriptions or where payment occurred after the death of the investor

  • in Box C applies only where interest was paid on cash on deposit held in a stocks and shares ISA before 1 July 2014 - see the archived guidance notes that applied before 6 April 2016

  • in Box D, enter details of any tax deducted at the basic rate on chargeable events

Part 3 - Reconciliation

Managers should enter the net amount claimed in Box F - this is the tax claimed in Box A less any tax adjustments in Box E. Where the net result is that there is a sum payable, complete box G.

Part 4

Net amount from interim claims made - Enter the amount of monies previously claimed on all interim claims made for the tax year. If no interim claims have been previously submitted, managers should enter ‘NIL’ in Box H. Where the manager has already paid previously over claimed amounts to HMRC in interim claim made during the tax year, the total amount paid should be entered in Box J.

Part 5 - total amount for year

Enter in Box K the total amount of monies that are being claimed for the tax year. Where monies are due to HMRC, the amount should be entered at Box L.

HMRC will write to the ISA manager explaining how this amount can be paid by BACS. The BACS payment must include the unique payment reference number contained in the letter from HMRC.

Do not send a cheque to HMRC.

Certificate - Authorised signatory

The form ISA14 must be signed by an authorised signatory. This must be one of the persons already notified to HMRC - see information to be supplied before claims are made.

Assessments and recovery of tax and charges

Where amounts claimed or deductions made cannot be recovered from the next claim, HMRC will normally issue an informal notice advising the manager of the amount payable and telling the manager how to pay the amount due.

Where amounts claimed or deductions made cannot be recovered informally, HMRC will make assessments on the manager.

Repayment of foreign tax

Managers may only claim United Kingdom income tax from HMRC. They must make their own arrangements to make claims from foreign fiscal agencies under Double Taxation Agreements:

  • if the ISA investor is resident in the United Kingdom the relevant claim forms can be obtained from the foreign tax authority

  • if the ISA investor is not resident in the UK the relevant claim forms can be downloaded

Managers should bear in mind that if it’s a requirement of the double taxation agreement that the income is subject to tax in the UK, no repayment may be claimed.

Published 5 April 2018
Last updated 24 May 2018 + show all updates
  1. Sections under 'insurer managers and insurers that provide policies to other ISA managers' and 'how to pay' have been updated.
  2. First published.