The Individual Savings Account (Amendment) Regulations 2002

Explanatory Note

(This note is not part of the Regulations)

These Regulations amend the Individual Savings Account Regulations 1998 (S.I. 1998/1870) (“the principal Regulations”) consequent on the restructuring of section 552 of the Income and Corporate Taxes Act 1988 (c. 1) (“section 552”) by paragraph 18 of Schedule 28 to the Finance Act 2001 (c. 9) (“paragraph 18”).

Regulation 1 provides for the citation, commencement and effect of the Regulations, and regulation 2 provides for the interpretation of certain terms used in the Regulations.

Regulation 3 introduces the amendments to the principal Regulations.

Regulation 4 amends regulation 35(6) of the principal Regulations to ensure the same treatment for chargeable event gains arising under the Regulations in respect of an insurance policy held under the insurance component of an individual savings account as that for other chargeable event gains.

Regulation 5 amends regulation 36 of the principal Regulations (application of Chapter 2 of Part 13 of the Taxes Act to policies where an investor ceases to be, or was not entitled to, relief from tax). Section 552 as originally enacted has been split into two sections (552 and 552ZA). Accordingly, paragraph (2) substitutes a new paragraph (6) of regulation 36 of the principal Regulations. This modifies section 552 as substituted by paragraph 18. Paragraph (3) of regulation 5 inserts a new paragraph (6A) into regulation 36 of the principal Regulations. The new paragraph modifies the new section 552ZA for the purposes of individual savings accounts. Paragraph (7) of regulation 36 of the principal Regulations, which is unnecessary as a result of the restructuring of section 552, is revoked by paragraph (4) of regulation 5.

A regulatory impact assessment has been prepared in respect of these Regulations. A copy has been placed in the library of each House of Parliament and may be found on the Inland Revenue website (www.inlandrevenue.gov.uk) or obtained from Revenue Policy, Business Tax, Room 5W5, 5th Floor, 22 Kingsway, London WC2B 6NR.