The Individual Savings Account Regulations 1998

General conditions for accounts and subscriptions to accounts U.K.

4.—(1) An account is a scheme of investment, to which an individual who is a qualifying individual may subscribe, and in respect of which the following conditions must be fulfilled—

(a) subject to sub-paragraphs (c) to (e), that an account is made up of one or more of the following components only, namely—

• a stocks and shares component,

• a cash component, and

• an insurance component;

(b) that, on the setting up of the account it is, subject to sub-paragraphs (c) to (e), designated by the account manager as—

(i) a maxi-account, or

(ii) a mini-account, or

(iii) a TESSA only account,

and such designation shall be treated as continuing to have effect for the year in which the individual first subscribes to the account, and each successive year following that year in which the individual subscribes to the account;

(c) that an account which is or has been designated as a maxi-account (a “maxi-account") must be—

(i) made up of a stocks and shares component (with or without other components[F1 , save that a maxi-account to which the qualifying individual first subscribes when that individual is under the age of 18 years must include a cash component]), and

(ii) the only account, other than a TESSA only account, to which the qualifying individual subscribes in any year during which such designation continues to have effect;

(d) that an account which is or has been designated as a mini-account (a “mini-account") must be—

(i) made up of a single specified component, and

(ii) the only account, other than a mini-account made up of a different type of component to that specified in accordance with paragraph (i) or a TESSA only account, to which the qualifying individual subscribes in any year during which such designation continues to have effect;

(e) that an account which is or has been designated as a TESSA only account (a “TESSA only account") must—

(i) be made up of a cash component only, and

(ii) only accept subscriptions made pursuant to regulation 5(1)(c);

(f) that all cash subscriptions shall, forthwith on payment being made—

(i) in the case of a maxi-account, subject to [F2 paragraph (ia) and] paragraph (2), be allocated irrevocably to the component agreed between the account investor and the account manager, and

[F3 (ia) in the case of a maxi-account where the qualifying individual is under 18 years of age, be treated as allocated irrevocably to the cash component of the account, and]

(ii) in the case of a mini-account, or a TESSA only account, be treated as allocated irrevocably to the single component of the account;

(g) that it is an account to which only one qualifying individual subscribes;

(h) that, subject to paragraph (4) below and regulation 7(2)(h), it is an account to which the qualifying individual subscribes only by payment to the account manager of a sum or sums of the individual’s cash which (ignoring transfers and payments from the account manager to the individual) do not in the aggregate in any year exceed the relevant subscription limit.

(2) [F4 Subject to paragraphs (2A) and (2B), the] subscription limit for any maxi-account for the purposes of these Regulations is £7,000 for the [F5 years 1999–00 [F6 to 2005–06]] and £5,000 for subsequent years, of which no more than £3,000 in the [F5 years 1999–00 [F6 to 2005–06]] , and £1,000 in subsequent years, may be allocated to a cash component, and no more than £1,000 may be allocated in any year to an insurance component.

[F7 (2A) The subscription limit for any maxi-account for any year, at the end of which the qualifying individual is 16 years of age or over but less than 18 years, is £3,000 in the years 2001–02 to 2005–06, and £1,000 in subsequent years.

(2B) For any year during which the qualifying individual attains the age of 18 years, no more than £3,000 in the years 2001–02 to 2005–06, and £1,000 in subsequent years, may be subscribed before the individual attains that age.]

(3) The subscription limit for any mini-account for the purposes of these Regulations is—

(a) in the case of an account made up of a cash component, £3,000 for the [F8 years 1999–00 [F9 to 2005–06]] and £1,000 for subsequent years,

(b) in the case of an account made up of an insurance component, £1,000,

(c) in the case of an account made up of a stocks and shares component, £3,000.

(4) The subscription limit for any TESSA only account is, assuming that the words “in any year" in paragraph (1)(h) were omitted, that contained in paragraph (1)(e)(ii) above.

(5) An account must at all times be managed in accordance with these Regulations by an account manager and under terms agreed in a recorded form between the account manager and the account investor.

(6) Apart from other requirements of these Regulations the terms agreed to which paragraph (5) refers shall include the following conditions—

(a) that the account investments shall be in the beneficial ownership of the account investor;

(b) that, except in relation to qualifying investments for a cash component within regulation 8(2)(a), (b) or (e), and subject to regulation 15—

(i) the title to all account investments shall be vested in the account manager or his nominee or jointly in one of them and the account investor, and

(ii) where a share certificate or other document evidencing title to an account investment is issued, it shall be held by the account manager or as he may direct;

(c) that, in relation to a stocks and shares component, and qualifying investments falling within regulation 8(2)(c) and (d), the account manager shall, if the account investor so elects, arrange for the account investor to receive a copy of the annual report and accounts issued to investors by every company, unit trust, open-ended investment company or other entity in which he has account investments;

(d) that, in relation to a stocks and shares component, and qualifying investments falling within regulation 8(2)(c) and (d), the account manager shall be under an obligation (subject to any provisions made under any enactment and if the account investor so elects) to arrange for the account investor to be able—

(i) to attend any meetings of investors in companies, unit trusts, open-ended investment companies and other entities in which he has account investments,

(ii) to vote, and

(iii) to receive, in addition to the documents referred to in sub-paragraph (c), any other information issued to investors in such companies, unit trusts, open-ended investment companies and other entities;

(e) that the account manager shall satisfy himself that any person to whom he delegates any of his functions or responsibilities under the terms agreed with the account investor is competent to carry out those functions or responsibilities;

(f) that [F10 on the instructions of the account investor (“the transfer instructions”) and within such time as is stipulated by the account investor in the transfer instructions]—

(i) an account, with all rights and obligations of the parties to it, or

(ii) such parts thereof as may be agreed between the account investor and the account manager,

[F11 shall] be transferred to another account manager subject to and in accordance with regulation 21;

[F12 (fa) that on the instructions, subject to regulation 9(3)(b), of the account investor (“the withdrawal instructions”) and within such time as is stipulated by the account investor in the withdrawal instructions, account investments, interest, dividends, rights or other proceeds in respect of such investments or any cash shall be transferred or paid to him;]

(g) that the account manager shall notify the account investor if by reason of any failure to satisfy the provisions of these Regulations an account is or will become no longer exempt from tax by virtue of regulation 22(1).

[F13 (7) The time stipulated in transfer instructions or withdrawal instructions shall be subject to any reasonable business period (not exceeding 30 days) of the account manager required for the practical implementation of the instructions.]

Textual Amendments

F1 Words in reg. 4(1)(c)(i) inserted (6.4.2001) by The Individual Savings Account (Amendment) Regulations 2001 (S.I. 2001/908), regs. 1, 3(2)

F2 Words in reg. 4(1)(f)(i) inserted (6.4.2001) by The Individual Savings Account (Amendment) Regulations 2001 (S.I. 2001/908), regs. 1, 3(3)

F3 Reg. 4(1)(f)(ia) inserted (6.4.2001) by The Individual Savings Account (Amendment) Regulations 2001 (S.I. 2001/908), regs. 1, 3(4)

F4 Words in reg. 4(2) substituted (6.4.2001) by The Individual Savings Account (Amendment) Regulations 2001 (S.I. 2001/908), regs. 1, 3(5)(a)

F5 Words in reg. 4(2) substituted (6.4.2000) by The Individual Savings Account (Amendment) Regulations 2000 (S.I. 2000/809), regs. 1, 2

F6 Words in reg. 4(2) substituted (6.4.2001) by The Individual Savings Account (Amendment) Regulations 2001 (S.I. 2001/908), regs. 1, 3(5)(b)

F7 Reg. 4(2A)(2B) inserted (6.4.2001) by The Individual Savings Account (Amendment) Regulations 2001 (S.I. 2001/908), regs. 1, 3(6)

F8 Words in reg. 4(3)(a) substituted (6.4.2000) by The Individual Savings Account (Amendment) Regulations 2000 (S.I. 2000/809), regs. 1, 2

F9 Words in reg. 4(3)(a) substituted (6.4.2001) by The Individual Savings Account (Amendment) Regulations 2001 (S.I. 2001/908), regs. 1, 3(7)

F10 Words in reg. 4(6)(f) substituted (1.10.2002) by The Individual Savings Account (Amendment No. 2) Regulations 2002 (S.I. 2002/1974), regs. 1(2), 3(2)(a)

F11 Word in reg. 4(6)(f) substituted (1.10.2002) by The Individual Savings Account (Amendment No. 2) Regulations 2002 (S.I. 2002/1974), regs. 1(2), 3(2)(b)

F12 Reg. 4(6)(fa) inserted (1.10.2002) by The Individual Savings Account (Amendment No. 2) Regulations 2002 (S.I. 2002/1974), regs. 1(2), 3(3)

F13 Reg. 4(7) inserted (1.10.2002) by The Individual Savings Account (Amendment No. 2) Regulations 2002 (S.I. 2002/1974), regs. 1(2), 3(4)