The Individual Savings Account Regulations 1998

Exemption from tax of account income and gains U.K.

22.—(1) Subject to these Regulations—

(a) no tax shall be chargeable on the account manager or his nominee or on the account investor—

(i) in respect of interest, dividends, distributions or gains in respect of account investments [F1 (excluding any building society bonus)], or

[F2 (ia) in respect of alternative finance return or profit share return paid by a financial institution (within the meanings in Chapter 5 of Part 2 of the Finance Act 2005);] [F3 or

(ib) in respect of a payment under a building society bonus scheme, so far as the payment is calculated by reference to account investments (and if paid directly by the society into the account, the payment shall not count towards the subscription limits in regulation 4(2) to (3)); or]

(ii) on any annual profits or gains treated by section 714(2) of the Taxes Act M1 as having been received by any of them in respect of account investments, or

(iii) on an offshore income gain to which a disposal made by any of them of an account investment gives rise, which is treated by section 761(1) of the Taxes Act M2 as constituting profits or gains, or

(iv) on a profit realised by any of them from the discount on a relevant discounted security within the meaning of Schedule 13 to the Finance Act 1996 M3 , which is held as an account investment, or

(v) in respect of gains treated by section 541 of the Taxes Act M4 as arising in connection with a policy of life insurance which is an account investmentF4 ...;

(b) losses in respect of account investments shall be disregarded for the purposes of capital gains tax;

[F5 (ba) any gain or loss accruing on and attributable to a payment within paragraph (ib) of sub-paragraph (a) shall not be a chargeable gain or allowable loss for capital gains tax purposes;]

(c) a corresponding deficiency occurring at the end of the final year, within the meaning of section 549(1) of the Taxes Act M5 , so far as it relates to a policy of life insurance which is an account investmentF6 ..., shall not be allowable as a deduction from the total income of the account investor;

(d) relief in respect of tax shall be given in the manner and to the extent provided by these Regulations; and

(e) interest on a cash deposit which is an account investment held under a cash component shall not[F7 , except for the purposes of section 660B of the Taxes Act,] be regarded as income for any income tax purposes.

(2) An account investor who, after subscribing to an account, at any time ceases to be resident in the United Kingdom, shall be treated as if he were resident in the United Kingdom for the purposes of determining his entitlement to, or to payment of, tax credits in respect of qualifying distributions, so far as they relate to account investments under an account held by him.

Textual Amendments

F1 Words in reg. 22(1)(a)(i) added (1.1.2007) by The Individual Savings Account (Amendment) Regulations 2006 (S.I. 2006/3194), regs. 1, 4(a)

F2 Reg. 22(1)(a)(ia) inserted (27.12.2005) by The Individual Savings Account (Amendment No. 3) Regulations 2005 (S.I. 2005/3350), regs. 1, 11

F3 Reg. 22(1)(a)(ib) and preceding word inserted (1.1.2007) by The Individual Savings Account (Amendment) Regulations 2006 (S.I. 2006/3194), regs. 1, 4(b)

F4 Words in reg. 22(1)(a)(v) omitted (with effect in accordance with reg. 1(2) of the amending S.I.) by virtue of The Individual Savings Account (Amendment No. 2) Regulations 2004 (S.I. 2004/2996), regs. 1(1), 15(a)

F5 Reg. 22(1)(ba) inserted (1.1.2007) by The Individual Savings Account (Amendment) Regulations 2006 (S.I. 2006/3194), regs. 1, 5

F6 Words in reg. 22(1)(c) omitted (with effect in accordance with reg. 1(2) of the amending S.I.) by virtue of The Individual Savings Account (Amendment No. 2) Regulations 2004 (S.I. 2004/2996), regs. 1(1), 15(b)

F7 Words in reg. 22(1)(e) inserted (6.4.2001) by The Individual Savings Account (Amendment) Regulations 2001 (S.I. 2001/908), regs. 1, 8

Marginal Citations

M1 1988 c.1; section 714 was amended by section 105 of, and Schedule 41 Part V(3) to, the Finance Act 1996 (c.8).

M2 Section 761 was amended by paragraphs 1 and 11 of Schedule 14 to the Finance Act 1990 (c.29), and section 290 of, and paragraph 14 of Schedule 10 to, the Taxation of Chargeable Gains Act 1992 (c.12).

M3 1996 c.8.

M4 1988 c.1; section 541 was amended by section 90 of, and paragraphs 4 and 8 of Schedule 9 to, the Finance Act 1989 (c.26).

M5 Section 549 was amended by paragraph 9(4) of Schedule 7 to the Finance Act 1991 (c.31), section 19 of the Finance (No. 2) Act 1992 (c.48), section 79 of and paragraphs 6 and 25 of Schedule 6 to the Finance Act 1993 (c.34), and paragraphs 13 and 28 of Schedule 6 to the Finance Act 1996 (c.8).