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Savings (Government Contributions) Act 2017

Type Public General Act

Publication 2017-01-16

State In force

Department Statute Law Database

Source legislation.gov.uk

Reform history JSON API

Government contributions to Lifetime ISAs

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(1) Where a qualifying addition to a Lifetime ISA is made in a relevant period, HMRC must pay a government bonus.

(2) For the purposes of this Act, a “Lifetime ISA” is a plan of a description specified in Treasury regulations.

(3) For the purposes of this section and Schedule 1—

(a) an addition to a Lifetime ISA is a “qualifying addition” if it is of a description specified in Treasury regulations, and

(b) a period is a “relevant period” if it is a period specified in Treasury regulations.

(4) A description may be specified under subsection (2)—

(a) only if some or all of the income from investments under plans of that description is exempt from income tax as a result of investment plan regulations;

(b) even if plans of that description are referred to in investment plan regulations—

(i) as individual savings accounts other than lifetime individual savings accounts, or

(ii) otherwise than as individual savings accounts.

(5) A government bonus under this section is an amount determined in accordance with Treasury regulations.

(6) Schedule 1 makes further provision in connection with government bonuses under this section.

(7) In subsection (4) “investment plan regulations” means regulations made under section 694 of the Income Tax (Trading and Other Income) Act 2005.

Government contributions to Help-to-Save accounts

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(1) If there is entitlement to an amount of government bonus in respect of a Help-to-Save account, the amount must be paid by the paying authority.

(2) The paying authority is the Treasury but, if there are arrangements for government bonuses under this section to be paid by HMRC or the Director of Savings, the paying authority is (as the case may be) HMRC or the Director.

(3) Schedule 2—

(a) makes provision about the interpretation of this section, and

(b) makes further provision in connection with Help-to-Save accounts.

Income tax treatment of Government contributions under section 1 or 2

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(1) In Chapter 9 of Part 6 of the Income Tax (Trading and Other Income) Act 2005 (other exempt income), after section 775 insert—

(775A) No liability to income tax arises in respect of a payment of, or in respect of, a government bonus under section 1 or 2 of the Savings (Government Contributions) Act 2017.

(2) Subsection (3) applies to a Lifetime ISA or Help-to-Save account which would be treated, by virtue of any of sections 564E to 564G of the Income Tax Act 2007, as an alternative finance arrangement but for the payment of a government bonus under this Act.

(3) A Lifetime ISA or Help-to-Save account to which this subsection applies is to be treated, for the purposes of Part 10A of the Income Tax Act 2007, as an alternative finance arrangement.

(4) In this section “alternative finance arrangement” has the meaning given by section 564A of the Income Tax Act 2007.

Regulations

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(1) Any power to make regulations under this Act is exercisable by statutory instrument.

(2) A statutory instrument containing (whether alone or with other provision)—

(a) the first regulations under section 1(5),

(b) the first regulations under any of paragraphs 4, 7(1)(a), 7(3), 7(4), 7(5), 8(2), 8(7) and 11 of Schedule 1,

(d) regulations under paragraph 3(6)(a) of Schedule 2 which result in the maturity period being shortened,

(e) the first regulations under any of paragraphs 3(7), 5(1), 6(1), 7(2), 10(1)(b), 15(2) and 16 of Schedule 2, or

(f) regulations under paragraph 10(2) of Schedule 2 which result in the maximum monthly amount being decreased,

is not to be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.

(3) A statutory instrument which—

(a) contains regulations under this Act, and

(b) is not subject to a requirement that a draft of the instrument be laid before, and approved by a resolution of, the House of Commons,

is subject to annulment in pursuance of a resolution of the House of Commons.

(4) Subsection (3) does not apply to regulations under section 6(3).

(5) For the purposes of subsection (2)(b), regulations under paragraph 2(2) of Schedule 1 that could be made under a provision listed in subsection (2)(b) are treated as regulations under that provision.

(6) Regulations under this Act may—

(a) apply generally or only in specified cases or circumstances;

(b) make different provision for different cases or circumstances;

(d) include transitory or transitional provision or savings.

Interpretation and amendments

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(1) In this Act—

“Help-to-Save account” has the meaning given by paragraph 3 of Schedule 2,

“HMRC” means the Commissioners for Her Majesty's Revenue and Customs,

“Lifetime ISA” has the meaning given by section 1(2), and

“Treasury regulations” means regulations made by the Treasury.

(2) In Schedule 2 to the Northern Ireland Act 1998 (excepted matters), before paragraph 10 insert—

(9D) Bonuses under the Savings (Government Contributions) Act 2017.

(3) In paragraph 19(1) of Schedule 36 to the Finance Act 2008 (information not covered by information notices), before the “or” at the end of paragraph (a) insert—

(aa) information that relates to the conduct of a pending appeal under the Savings (Government Contributions) Act 2017 or any part of a document containing such information,

Short title and commencement

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(1) This Act may be cited as the Savings (Government Contributions) Act 2017.

(2) This Act comes into force on the day after that on which it is passed, subject to subsection (3).

(3) The duty under section 2 does not apply in relation to accounts opened before such date as may be specified in Treasury regulations.

(4) Without prejudice to the generality of section 4(6)(a) and (b), different dates may be specified under subsection (3) in relation to different descriptions of eligible persons (see paragraph 4 of Schedule 2), and any such description may be framed in a way that results in different dates being specified under subsection (3) for different areas.

SCHEDULE 1

Part 1 — Introductory

Interpretation: meaning of “bonus”, “plan manager” and “document”

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(1) In this Schedule “bonus” means a government bonus under section 1.

(2) For the meaning of “plan manager”, in relation to a Lifetime ISA, see section 696(2) of the Income Tax (Trading and Other Income) Act 2005.

(3) In this Schedule “document” includes a part of a document (except where the context otherwise requires).

HMRC responsible for administration of bonuses and withdrawal charges

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(1) HMRC are responsible for—

(a) the payment and management of bonuses, and

(b) the collection and management of amounts payable under paragraph 8 (charges on some withdrawals from Lifetime ISAs).

(2) Treasury regulations may make provision about or in connection with—

(a) the payment and administration of bonuses;

(b) the collection and administration of amounts payable under paragraph 8.

(3) The following provisions of this Schedule do not limit the generality of the powers under sub-paragraph (2).

Part 2 — Payment of government bonuses

Claims for bonuses

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(1) Treasury regulations may—

(a) provide that a bonus is payable only if a claim for it is made in accordance with Treasury regulations;

(b) require a person who is or was the plan manager of a Lifetime ISA to make a claim for a bonus for qualifying additions made to the Lifetime ISA.

(2) With regards to claims for bonuses, Treasury regulations may—

(a) specify the periods within which claims are to be made;

(b) specify the information to be included in claims;

(d) specify the form or manner in which claims are to be made;

(e) make provision about the assessment of claims;

(f) specify steps to be taken if a claim is rejected in whole or part;

(g) confer rights to a review of a rejection of a claim;

(h) make provision for or in connection with appeals against rejections of claims;

(i) provide for amendment of a claim if errors are discovered in it.

(3) Treasury regulations may authorise HMRC to specify any of the matters mentioned in sub-paragraph (2)(b) to (d).

Recovery of wrongly-paid bonus

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(1) Treasury regulations may provide for the repayment of any amount paid by way of bonus that ought not to have been paid.

(2) The regulations may (in particular) make provision—

(a) identifying the persons liable to make a repayment;

(b) charging interest on repayable amounts;

(3) The provision that may be made under sub-paragraph (2)(c) includes (in particular) provision applying or incorporating, with or without modifications, any enactment that makes provision in relation to the recovery of amounts of income tax or capital gains tax which has been repaid to a person but which ought not to have been repaid to the person.

Penalties for inaccuracies in claims

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(1) This paragraph applies where—

(a) a claim for a bonus contains information which is inaccurate,

(b) the inaccuracy is material, and

(2) Condition A is that the inaccuracy is careless or deliberate.

(3) An inaccuracy is careless if it is due to a failure by the claimant to take reasonable care.

(4) Condition B is that the claimant knows of the inaccuracy at the time the claim is made but does not inform an officer of Revenue and Customs at that time.

(5) Condition C is that the claimant—

(a) discovers the inaccuracy some time later, and

(b) fails to take reasonable steps to inform an officer of Revenue and Customs.

(6) The claimant is liable to a penalty not exceeding the amount for the time being specified in paragraph 40A(5) of Schedule 36 to the Finance Act 2008 (penalties for inaccurate information and documents).

(7) Where the information contains more than one material inaccuracy, a penalty is payable for each inaccuracy.

(8) Paragraphs 46 to 49 and 52 of Schedule 36 to the Finance Act 2008 (penalties: assessment, appeals and enforcement) apply in relation to a penalty under this paragraph as they apply in relation to a penalty under paragraph 40A of that Schedule.

Information notice may require information related to claim for bonus

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(1) This paragraph applies where a claim is made for a bonus for any qualifying additions.

(2) An officer of Revenue and Customs may by notice require a relevant plan manager or a person who has made any of the additions—

(a) to provide the officer with any information, or

(b) to produce a document to the officer,

if the officer reasonably requires the information or document in connection with the claim.

(3) Paragraphs 6(2), 7, 8, 18 to 20, 23 to 27, 42 and 43 of Schedule 36 to the Finance Act 2008 (information notices etc) apply in relation to notices under sub-paragraph (2) as they apply in relation to notices under paragraph 1 of that Schedule (see the definition of “information notice” in paragraph 6(1) of that Schedule).

(4) Where a notice under sub-paragraph (2) is given to a person other than a relevant plan manager, an officer of Revenue and Customs must give a copy of the notice to each relevant plan manager.

(5) A person who is given a notice under sub-paragraph (2) may appeal against the notice or any requirement in the notice.

(6) Paragraph 32 of Schedule 36 to the Finance Act 2008 (procedures for appeals against information notices) applies for the purposes of an appeal under sub-paragraph (5) as it applies for the purposes of an appeal under Part 5 of that Schedule, except that a reference to an information notice has effect as a reference to a notice under sub-paragraph (2).

(7) A person is a “relevant plan manager” for the purposes of this paragraph if the person—

(a) is the plan manager of any Lifetime ISA to which any of the qualifying additions was made,

(b) was the plan manager of a Lifetime ISA at or after the time any of the qualifying additions was made to that Lifetime ISA, or

Part 3 — Charges on some withdrawals from Lifetime ISAs

Withdrawals not triggering charge

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(1) Paragraph 8 does not apply to a withdrawal from a Lifetime ISA—

(a) at a time after the investor has reached such age as may be specified in Treasury regulations (but see sub-paragraph (3));

(b) for the purposes of a first-time residential purchase being made by the investor (but see sub-paragraph (4));

(d) at a time after the investor's death;

(e) that is by way of transfer to another Lifetime ISA.

(2) Treasury regulations may specify other withdrawals from a Lifetime ISA to which paragraph 8 does not apply.

(3) Treasury regulations may provide, as an exception to sub-paragraph (1)(a), that paragraph 8 applies to a withdrawal from a Lifetime ISA if—

(a) an addition is made to a Lifetime ISA at a time after the investor has reached such age as may be specified in the regulations,

(b) the withdrawal is under the regulations treated as being or including a withdrawal of investments representing the whole or part of the addition, and

(i) beginning with the date of the addition, and

(ii) of a duration specified in the regulations.

(4) Treasury regulations may specify withdrawals from a Lifetime ISA, which may be withdrawals within sub-paragraph (1)(b), to which paragraph 8—

(a) does not apply at the time of withdrawal, but

(b) comes to apply on a subsequent failure to meet conditions specified in the regulations.

(5) Treasury regulations may make provision supplementing sub-paragraph (1), including (in particular) provision about—

(a) what counts as a “first-time residential purchase”;

(b) whether, or the extent to which, a withdrawal is for the purposes of such a purchase;

(d) conditions to be met in order for a transfer to count for the purposes of sub-paragraph (1)(e).

Charge when non-exempt withdrawal made

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(1) Except as provided by or under paragraph 7, this paragraph applies in relation to a withdrawal from a Lifetime ISA.

(2) An amount, equal to the total of—

(a) the specified percentage of so much of the withdrawal as is a withdrawal of sterling, and

(b) the specified percentage of the market value of the rest (if any) of the withdrawal,

is to be paid (in sterling) to HMRC.

(3) Where there is a plan manager of the Lifetime ISA at the time of the withdrawal—

(a) that plan manager and the investor are jointly and severally liable to HMRC for the amount payable under sub-paragraph (2), and

(b) without prejudice to paragraph (a), that plan manager must deduct that amount from the withdrawal and pay the amount deducted to HMRC.

(4) Otherwise, the investor is liable to HMRC for the amount payable under sub-paragraph (2).

(5) In sub-paragraph (2) “specified” means specified by Treasury regulations.

(6) In relation to a withdrawal specified under paragraph 7(4), sub-paragraph (3) has effect as if it provided as follows—

(3) Where, at the time an amount becomes payable under sub-paragraph (2) in the case of the withdrawal, there is a plan manager of the Lifetime ISA ( “ the original ”) or any Lifetime ISA that in accordance with Treasury regulations is a successor to the original— (a) each such plan manager, and the investor, are jointly and severally liable to HMRC for the amount payable under sub-paragraph (2), (b) the liability under paragraph (a) of a plan manager of a Lifetime ISA is limited to the amount or value of the investments from time to time held under that Lifetime ISA, and (c) a plan manager of a Lifetime ISA may meet a liability under paragraph (a) by deducting an amount from that Lifetime ISA and paying the amount deducted to HMRC.

(7) Treasury regulations may make provision for the amount payable under sub-paragraph (2) in the case of a withdrawal to be calculated not as mentioned in that sub-paragraph but in accordance with the regulations.

(8) A percentage specified under sub-paragraph (2), or provision made under sub-paragraph (7), may be such that the amount payable to HMRC under sub-paragraph (2) in the case of a withdrawal is greater than so much of the withdrawal as is attributable, directly or indirectly, to bonuses.

Payment of withdrawal charges

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(1) Treasury regulations may make provision—

(a) for requiring a person who is or was a plan manager of a Lifetime ISA, or the investor, to submit returns of information relating to withdrawals from the Lifetime ISA;

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