This newsletter has been published by HMRC to update stakeholders on the latest news for Individual Savings Account (ISA) managers and Child Trust Fund (CTF) providers. It includes articles on:

• additional permitted subscriptions;
• National Insurance numbers;
• Repair of an ISA account where the overall subscription has exceeded the legislative limit;
• Partial transfers of current year subscriptions;
• European Economic Area (EEA) Undertakings for Collective Investment in Transferable Securities (UCITS) and the Overseas Funds Regime (OFR); and
• Extended period for issuing tax calculation (P800) letters.

Key areas of interest:

Additional permitted subscriptions

Since April 2015, spouses or civil partners of deceased ISA savers have been eligible for an additional ISA allowance, the Additional Permitted Subscription (APS), for deaths on or after 3 December 2014. For deaths on or before 5 April 2018, the allowance transferred to the surviving spouse/civil partner was equal to the value of the ISA on the date of death. However, for deaths on or after 6 April 2018, the APS can be either the value of the deceased’s ISA at their date of death or the point the ISA ceased to be a ‘continuing account of a deceased investor’, whichever is higher. For more information on this, please see Death of an ISA investor.

HMRC’s latest update says that, where an APS allowance based on the value at date of death was transferred but not used, and the continuing account of the deceased investor was not closed, there may be a higher additional permitted subscription allowance to which the spouse or civil partner is entitled when the estate is finalised. 

The transferring manager will be unaware if there has been an APS with the receiving manager. Similarly, the receiving manager will be unaware if there has been an increase in value when the estate is finalised.

There is no expectation from HMRC that the receiving manager will request a second APS value from the transferring manager, unless instructed to do so by the investor. Similarly, there is no expectation that the transferring manager will provide a second APS value to the receiving manager unless it has been requested by the investor or the receiving manager.

National Insurance number

Broadly, an individual will have, or is eligible to apply for, a National Insurance number if they are over the age of 16 and:

• are planning to (and have the right to) work and have a UK National Insurance liability;
• are claiming benefits;
• applied for a student loan;
• is paying Class 3 voluntary National Insurance contributions.

The Model Application Form is due to be updated. ISA managers are reminded the model form is an example only, and exact replication is not mandatory providing all the regulatory obligations are met. If the investor is eligible and does have their National Insurance number, the form will allow them to confirm this and provide the information. The form will also provide the relevant link where the investor can check if they are eligible for a National Insurance number. If the investor is eligible and does not yet have a National Insurance number, the form will allow them to confirm eligibility and direct them to where to apply for their National Insurance number. If the investor is not eligible for a National Insurance number, they can confirm this and continue to open an ISA providing other required conditions are met. The form will be amended to read: 

‘Please click on this link Apply for a National Insurance Number for information on National Insurance number which includes a section on who can apply.’

From 6 April 2025, managers can no longer accept an ISA application with a missing or dummy National Insurance number for new accounts. There is no change to the guidance for provisionally opening an ISA where all the required information is not provided straight away.

Repair of an ISA account where the overall subscription has exceeded the legislative limit

Previous year subscriptions

HMRC says that it has updated its guidance for invalid ISA accounts where the investor has exceeded the overall subscription limit in previous years. This is effective on all repair action taken from 6 December 2024. Only invalid investments in a repairable ISA will lose their tax exemption. This will be from the date of the first invalid subscription up to the date of repair (and could include current year investments). These dates are specified in a notice of discovery from HMRC to the ISA manager and the valid investments in a repaired ISA account may keep their tax exemption. Subscriptions to a repaired ISA for years other than that covered by the notice of discovery are not affected by that notice.

Current year subscriptions

If an ISA manager knows the investor has exceeded the subscription limit with the information they hold, they can void the invalid subscriptions. If the ISA manager is informed by the investor about the oversubscriptions, (for example, they’ve subscribed to accounts elsewhere) ISA managers should keep records. HMRC says that a phone call is acceptable if a record of the call is held.

European Economic Area (EEA) Undertakings for Collective Investment in Transferable Securities (UCITS) and the Overseas Funds Regime (OFR)

HMRC says that it is currently discussing with Financial Conduct Authority (FCA) the timetable for transitioning to OFR and the implications for funds which do not apply for OFR recognition. The outcome of those discussions will inform future newsletters. In the interim, managers should take no action regarding funds where OFR recognition had not been sought or has been denied.

Extended period for issuing tax calculation (P800) letters

In relation to non-ISA accounts, HMRC is reminding people that, due to higher than expected volumes, some individuals may have to wait until the new year to receive their P800s. This includes those who think they may have additional tax to pay on savings for the year ending 5 April 2024.

This is slightly longer than in previous years, where HMRC has aimed to complete most end-of-year PAYE reconciliations by the end of November. HMRC says that this process will be complete by the end of March 2025 and PAYE taxpayers are kindly asked not to chase until after that point. GOV.UK guidance is being updated to this effect. Please also see how to contact HMRC regarding income tax enquiries and our earlier Bulletin.

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