The Individual Savings Account (Amendment) Regulations 2025
These regulations amend the Individual Savings Account Regulations 1998, clarifying definitions, updating subscription rules, and limiting withdrawals.
Key changes include defining "long-term asset fund," requiring national insurance information for non-junior ISA subscriptions, restricting replacement subscriptions to the original account, preventing withdrawals that reduce the current year's subscription below zero, and specifying qualifying investments for stocks and shares and innovative finance components until the end of 2026.
The changes mostly take effect from July 15th, 2025, except for one regulation commencing April 6th, 2027.
Arguments For
Improved ISA Regulations: The amendments aim to clarify and improve the existing regulations governing Individual Savings Accounts, making them more transparent and efficient for both account holders and administrators.
Enhanced Investor Protection: New rules regarding national insurance information and restrictions on withdrawals enhance investor protection and ensure compliance with existing regulations.
Addressing specific regulatory gaps: The changes specifically target identified gaps and ambiguities in existing regulations, such as those surrounding the definition of 'long-term asset fund' and the replacement of previous years' subscriptions.
Facilitating investment in long-term assets: By including long-term asset funds as qualifying asset types under innovative finance, the regulations promote investment in this asset class, potentially leading to economic growth and infrastructure development.
Arguments Against
Increased Administrative Burden: The additional requirements for national insurance information and restrictions on withdrawals could increase the administrative burden on account managers.
Potential for Exclusion: The stricter rules around subscriptions might exclude some individuals from accessing ISA benefits, especially the less financially literate.
Complexity: Changes increase the complexity of the regulations, making them more difficult for individuals to fully comprehend.
Unintended Consequences: The introduction of new rules could inadvertently lead to unexpected consequences in areas not directly addressed by these regulations, thus requiring further review and adjustments.
- Citation, commencement and effect (1) These Regulations may be cited as the Individual Savings Account (Amendment) Regulations 2025. (2) Regulation 4 comes into force on 6th April 2027 and has effect in relation to the tax year 2027-28 and subsequent tax years. (3) The rest of these Regulations come into force on 15th July 2025.
This section outlines the title and effective dates of the regulations.
The regulations are officially titled the Individual Savings Account (Amendment) Regulations 2025.
Most of the regulations take effect on July 15th, 2025, while Regulation 4 comes into effect on April 6th, 2027, affecting tax years from 2027-28 onwards.
- Amendment of the Individual Savings Account Regulations 1998 The Individual Savings Account Regulations 1998 are amended as follows.
This section announces the amendment of the 1998 Individual Savings Account Regulations.
The following sections detail the specific changes made.
- Amendment of regulation 2 In paragraph (1)(b) of regulation 2 (interpretation), at the appropriate place insert— ““long-term asset fund” means a scheme to which chapter 15 of COLL applies;”.
Regulation 2 is amended to include a definition of "long-term asset fund." The definition specifies that a long-term asset fund refers to a scheme governed by Chapter 15 of the relevant legislation (COLL).
- Amendment of regulation 4ZA After paragraph (1A) of regulation 4ZA (subscriptions to an account other than a junior ISA account) insert— (1B) A qualifying individual may only subscribe to an account that is not a junior ISA account if the account manager of that account— (a) has been provided with the qualifying individual’s national insurance information specified in paragraph (4), and (b) has no reason to believe that the qualifying individual does not meet the requirement of regulation 12(3)(f).
Regulation 4ZA is amended to add a new condition for subscriptions to non-junior ISA accounts.
Individuals must supply their national insurance number, and the account manager must verify they satisfy regulation 12(3)(f).
- Amendment of regulation 5DDB (1) For paragraph (3) of regulation 5DDB (flexible account) substitute— (3) Any replacement of a previous years’ subscription may be made only to the account from which the withdrawal of a cash amount it is replacing was made. (3A) Any replacement subscription that is not deemed to be a replacement of a previous years’ subscription is to be treated as a subscription to an account as specified in regulation 4ZA (subscriptions to an account other than a junior ISA account). (2) In paragraph (4) of regulation 5DDB, before “Any withdrawal” insert “Subject to paragraph (4A),”. (3) After paragraph (4) of regulation 5DDB insert— (4A) No withdrawal under paragraph (1) may reduce the current year’s subscription amount to less than nil.
Regulation 5DDB is amended regarding flexible accounts and replacement subscriptions.
It now specifies that replacements only apply to the original account.
A new subsection (3A) clarifies treatment of non-replacement subscriptions, and (4A) prevents withdrawals that reduce the annual subscription to below zero.
- Amendment of regulation 7 After paragraph (2C) of regulation 7 (qualifying investments for a stocks and shares component) insert— (2D) Notwithstanding any provision of paragraph (1), investments which— (a) immediately before 1st October 2024 fell within paragraph (2)(f) by virtue of being units in, or shares of, a recognised UCITS, or (b) qualify under paragraph (2)(f) by virtue of being part of an umbrella scheme that immediately before 1st October 2024 fell within that paragraph by virtue of being units in, or shares of, a recognised UCITS, are to be treated, until the end of 31st December 2026, as qualifying investments for the stocks and shares component. (2E) Paragraph (2A) ceases to have effect at the end of 31st December 2026.
Regulation 7 is modified to clarify which investments qualify for the stocks and shares component of ISAs.
It specifies that certain investments in recognised Undertakings for Collective Investment in Transferable Securities (UCITS) that were eligible before October 1st, 2024, will continue to qualify until December 31st, 2026.
Paragraph 2A is repealed at the same date.
- Amendment of regulation 8A In paragraph (2) of regulation 8A (qualifying investments for an innovative finance component), after sub-paragraph (cb) insert— (cc) investments in a long-term asset fund;
Regulation 8A is amended to add "investments in a long-term asset fund" to the list of qualifying investments for the innovative finance component of an ISA.