Guidance

Individual Savings Accounts (ISAs) for managers: making returns to HM Revenue and Customs

How and when to submit annual returns and claims to HMRC if you’re an Individual Savings Account (ISA) manager.

Annual returns and claims

As an ISA manager, you must make an annual return and claim for all ISAs and Junior ISAs (JISA) to HM Revenue and Customs (HMRC) by 5 October following the end of the tax year to which they relate.

Annual returns and claims must be sent to HMRC on form ISA14.

You can also make interim claims for one or more tax months within a tax year. Interim claims must be submitted on form ISA10.

What can be claimed

You can claim UK Income Tax deducted from ISA investment income. If you receive interest payments from corporate bond funds you’ll normally receive them without tax deducted.

Interest payments 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 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. Consequently, companies paying interest to ISA managers should pay the interest without deduction of Income Tax where the manager operates a single nominee in which all the underlying beneficial holders are eligible to receive gross interest because, for example, they are all ISA investors.

However, 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 are 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(s) to ensure that interest is paid without deduction of Income Tax in future.

Property Income Distributions

UK Real Estate Investment Trusts (UK-REITs) make Property Income Distributions (PIDs), which normally have basic rate tax deducted at source.

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

  • operates separate nominee accounts - one for those beneficial owners entitled to gross payment (because, for example, they are 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 doesn’t 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 PIDs where the ISA has been made void or where the investor has died. As an interim measure the treatment of PIDs 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 PIDs 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

  • has received the PIDs 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(s).

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.

Before claims are made

If making a claim for the first time you must provide HMRC with the following details in writing:

  • full name and status of up to 5 individuals authorised to sign claims on your behalf
  • a copy of your authority for each signatory
  • an original signature for each signatory
  • bank account details including:
    • full name and branch of the bank repayments are to be made to
    • sort code
    • account number
    • account name
    • any special form of identification given to the account

You must advise HMRC in writing if any of these details change to avoid delays in payments.

Annual return of information

You must also make an annual return of information to HMRC. Returns must be completed and returned within 60 days of the:

  • 5 April of each year
  • date on which the manager ceased to qualify or act as a manager

All managers submitting a return for 2017 or a subsequent tax year must use the new spreadsheet or text file specifications.

Returns for 2016 and earlier years must be submitted using the previous specifications.

If you need to submit a ISAComm100(OCS) ‘ISA annual return of information’ for an earlier tax year you should email cni.enquiries@hmrc.gsi.gov.uk stating the year and whether you require a copy of the text specifications or spreadsheet (or both).

The preferred submission method is by electronic text file. To ensure successful submission, your text file must conform to the specification and format detailed in the ISA annual returns: electronic text file specification. If your text file is rejected you could be regarded as either having failed to make a return or as having made an incorrect return.

You can also make your return on a spreadsheet provided by HMRC. To use the HMRC spreadsheet:

  • click on the link above to open it
  • save it to your computer
  • complete it following the guidance in the yellow comment boxes

The most common cause of spreadsheet failure has been the inclusion of excessive characters (including spaces).

We’ve therefore updated the spreadsheet (attached per above) to include conditional formatting that will detect if more than the permitted number of characters has been entered in a cell. If you enter more than the permitted number of characters the cell on row 1 will turn red and will stay red until all the excess characters have been removed. The formatting will now detail the number of errors and position of the first error on row 1. As you correct the errors this information will update.

Spreadsheets with a red cell on row 1 will not process and you will be required to correct the error(s) and resubmit your return. The formatting will not check the accuracy or suitability of the data and the return could still fail.

The spreadsheets are Excel version 2003 (.xls), capable of accepting 65,536 rows. They will not convert to the later version of Excel (.xlsx), capable of holding in excess of a million rows.

If you require the larger (xlsx) version of the spreadsheet please e-mail cni.enquiries@hmrc.gsi.gov.uk detailing which spreadsheet you require.

When you have created your text file or completed the HMRC spreadsheet you can submit the return by one of the methods detailed in the notice.

Returns on permitted media should be sent to the address detailed in the notice.

If you have any queries regarding submitting your return please contact the Centre for National Information (CNI):

Email: tpi.c@hmrc.gsi.gov.uk
Telephone: 03000 582 413

What must be returned

You must report details for all ISAs (and JISAs) managed during the return period, including ISAs transferred in, and ISAs that have been closed.

You should exclude details of ISAs transferred out in full, made void, or not proceeded with or cancelled within 30 days of opening in the return period.

Where an investor holds more than one ISA with the same manager (for example, a cash ISA and a stocks and shares ISA), managers must report details of each ISA separately.

Annual return of statistical information

ISA managers must also make an annual return of statistical information to HMRC. Returns must be completed and returned within 60 days of the following reporting dates:

  • 5 April of each year
  • the date on which the manager ceased to qualify or act as a manager

What must be returned

Managers must make returns in relation to stocks and shares ISAs, the aggregate market value of investments under their management, together with separate figures for:

  • qualifying shares listed on a recognised stock exchange (including shares which are dual listed on a recognised stock exchange and listed/traded on another market)
  • shares admitted to trading on a recognised stock exchange in the European Economic Area (EEA)
  • qualifying securities issued by such a company where the:
  • the securities
  • the shares in the company issuing the securities
  • the company issuing the securities is a 75% subsidiary of a company whose shares are officially listed on a recognised stock exchange - included here will be securities of investment trusts that are so listed
  • qualifying securities issued by a company where the:
  • securities
  • shares in the company issuing the securities
  • company issuing the securities is a 75% subsidiary of a company whose shares are admitted to trading on a recognised stock exchange in the EEA - included here will be securities of investment trusts that are so admitted.
  • gilts
  • units in qualifying authorised unit trusts
  • shares in qualifying open-ended investment companies
  • shares in qualifying investment trusts
  • units and shares in qualifying non-UK collective investment schemes
  • the surrender value of qualifying policies of life insurance
  • cash
  • the total aggregate market value of all investments held in the ISAs

In relation to cash ISAs, the aggregate market value of investments under their management, together with separate figures for:

  • the surrender value of qualifying policies of life insurance
  • other investments (these will be investments that failed the 5% test before 1 July 2014
  • cash, including cash in share and deposit accounts
  • the total aggregate market value of all investments held in the ISAs

Any investment represented by Depository Interests (DI) should be included in the category representing the underlying investment. For example, the market value of a DI representing qualifying shares should be included in the total for qualifying shares.

In relation to innovative finance ISAs for 2016 to 2017 and later years, the aggregate market value of investments under their management, with separate figures for both:

  • the outstanding principal balance of peer-to-peer loans under management (that is, the capital amounts outstanding plus any interest due but unpaid on the loans(s) at the reporting date)
  • cash

You can make:

Returns can be submitted by post to HMRC or by email: savings.audit@hmrc.gsi.gov.uk.

Penalties

If you don’t provide the information on time or it’s incorrect you may be charged a penalty.

Getting help from HMRC

ISA managers can contact CNI if they have questions about how to submit annual information returns. You can email CNI or call them on Telephone: 03000 582 413.

If you have general questions about returns and claims, please email: HMRC’s Savings Schemes Team.

Published 20 October 2008
Last updated 2 March 2018 + show all updates
  1. Guidance added to the page to help customers complete the Annual return spreadsheet for ISA managers spreadsheet.
  2. Additional text the added to the Annual return of information section.
  3. First published.