HM TREASURY News
Release (110/07) issued by The Government News Network on 18 October 2007
The Economic
Secretary, Kitty Ussher, today announced that the Government would
allow people who during the recent financial market disruption
withdrew cash from Individual Savings Accounts (ISAs) held at
Northern Rock - and in the process lost their tax advantages - to
re-deposit that money into a cash ISA with Northern Rock or any
other provider, restoring their tax advantages.
Kitty Ussher said:
"To ensure that Northern Rock ISA
savers are not penalised by the financial instability in the
market. I can announce today that in these exceptional
circumstances, the Government will allow the people affected to
re-invest their money into any cash ISA, including Northern
Rock's, and thereby restore their tax advantages."
Savers wishing to restore their lost cash ISA tax advantage must
by 5 April 2008 either:
a) return their funds to a Northern Rock ISA, or
b) obtain
from Northern Rock a certificate for the amount of cash ISA
savings withdrawn between 13 and 19 September, and present this to
a new cash ISA provider when depositing the money.
This announcement applies to funds withdrawn from Northern Rock
ISAs between Thursday 13 September and Wednesday 19 September inclusive.
NOTES FOR EDITORS
1. Under the terms of this announcement, individuals will be able
to re-deposit in a cash ISA with Northern Rock or any other ISA
provider up to the whole amount withdrawn from their Northern Rock
ISA between 13 and 19 September, subject to one exception.
If;
a) the sum withdrawn includes subscriptions made to the
Northern Rock ISA in the current tax year (6 April 2007 to 5
April 2008), and
b) subscriptions have been made to another
cash ISA in the current tax year.
then the amount which can
be reinvested is limited if necessary to comply with the £3000
overall annual subscription limit. For example:
* £15,000 was
withdrawn from a Northern Rock ISA on 15 September. This included
£1,000 subscribed in May 2007. The investor subscribed £2,000 to
another cash ISA in 2007/08 using the funds withdrawn. As the
investor would not exceed the £3,000 subscription limit for
2007/08 by doing so, all of the £15,000 can be re-deposited. The
investor can make no further subscriptions to any cash ISA in
2007/08.
* In the same example if £2,500 has been subscribed
to another cash ISA, the overall subscription limit for 2007/08
would be exceeded by £500, if the full amount was re-deposited. In
this case the investor can only re-deposit £15,000 - £500 =
£14,500. HMRC will monitor the subscriptions made and contact
investors who exceed the limits.
2. Where the whole amount withdrawn from a Northern Rock cash ISA
between 13 and 19 September 2007 can be reinvested, the investor
can make further subscriptions up to the £3000 overall annual
subscription limit. For example, £15,000 was withdrawn from a
Northern Rock cash ISA on 15 September. This included £1000
subscribed in May 2007. The investor has not subscribed to another
cash ISA in 2007/08, and all of the £15,000 can be re-deposited.
The investor can also make further subscriptions to the account in
2007/08 of up to £2,000 (£3,000 - £1,000).
3. Individuals wishing to make deposits under the terms of this
announcement will be sent a certificate from Northern Rock showing
their:
a. Full name;
b. Permanent address including
postcode;
c. Date of birth;
d. national insurance number
(If they have one);
e. The total amount withdrawn from the
Northern Rock ISA; and
f. The date on which the withdrawal was made.
4. Northern Rock will be writing shortly to all ISA savers
affected by this announcement with a certificate containing these
details. Providers wishing to receive deposits under the terms of
this announcement will need to obtain, and retain, the
individual's certificate from Northern Rock. They will need
to treat the amount deposited as a transfer.
5. The Government will legislate for this by retrospective ISA
Regulations, to be made under a power that will be included in the
2008 Finance Bill. The Regulations will have retrospective effect
back to 13 September 2007.
6. Savers can transfer funds from one ISA manager to another
whenever they see fit. Individuals can usually transfer simply by
asking a new ISA manager to arrange the transfer. An existing ISA
manager is obliged to implement a transfer, but there may be a
charge for doing so.
7. Under the ISA Regulations an ISA must be transferred directly
between the two managers. Individuals cannot transfer their ISA by
closing it and opening a new ISA with the new ISA manager, except
in very limited circumstances. These rules continue to otherwise hold.
8. Further information on the ISA rules is available at: http://www.hmrc.gov.uk/isa/index.htm.
9. Non-media enquiries should be addressed to the Treasury
Correspondence and Enquiry Unit on 020 7270 4558 or by e-mail to public.enquiries@hm-treasury.gov.uk.
10. This press release and other Treasury publications and
information are available on the Treasury website. If you would
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