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Savings (Government Contributions) Bill (HC Bill 59)

A

BILL

TO

Make provision for, and in connection with, government bonuses in respect of
additions to savings accounts and other investment plans.

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and
consent of the Lords Spiritual and Temporal, and Commons, in this present
Parliament assembled, and by the authority of the same, as follows:—

1 Government contributions to Lifetime ISAs

(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
5in 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
10regulations.

(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) 15even 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) 20A 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.

Savings (Government Contributions) BillPage 2

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

2 Government contributions to Help-to-Save accounts

(1) If there is entitlement to an amount of government bonus in respect of a Help-to-Save
5account, 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) 10makes provision about the interpretation of this section, and

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

3 Income tax treatment of Government contributions under section 1 or 2

(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 15 Government bonus for savings account or other investment plan

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 2016.”

(2) Subsection (3) applies to a Lifetime ISA or Help-to-Save account which would
20be 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
25alternative finance arrangement.

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

4 Regulations

(1) Any power to make regulations under this Act is exercisable by statutory
30instrument.

(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,

(c) 35regulations under paragraph 17(5) of Schedule 1 which result in a
specified amount being increased,

(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),
4010(1)(b), 14(2) and 15 of Schedule 2, or

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

Savings (Government Contributions) BillPage 3

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) 5is 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
10Schedule 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;

(c) 15include consequential, supplementary or incidental provision;

(d) include transitory or transitional provision or savings.

5 Interpretation and amendments

(1) In this Act—

  • “Help-to-Save account” has the meaning given by paragraph 3 of
    20Schedule 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) 25In Schedule 2 to the Northern Ireland Act 1998 (excepted matters), before
paragraph 10 insert—

9D Bonuses under the Savings (Government Contributions) Act 2016.”

(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)
30insert—

(aa) information that relates to the conduct of a pending appeal
under the Savings (Government Contributions) Act 2016 or
any part of a document containing such information,”.

6 Short title and commencement

(1) 35This Act may be cited as the Savings (Government Contributions) Act 2016.

(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) 40Without 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

Savings (Government Contributions) BillPage 4

be framed in a way that results in different dates being specified under
subsection (3) for different areas.

Savings (Government Contributions) BillPage 5

SCHEDULES

Section 1

SCHEDULE 1 Lifetime ISAs: further provision

Part 1 5Introductory

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

1 (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) 10In this Schedule “document” includes a part of a document (except where
the context otherwise requires).

HMRC responsible for administration of bonuses and withdrawal charges

2 (1) HMRC are responsible for—

(a) the payment and management of bonuses, and

(b) 15the 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
20paragraph 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

25Claims for bonuses

3 (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
30make a claim for a bonus for qualifying additions made to the
Lifetime ISA.

Savings (Government Contributions) BillPage 6

(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;

(c) specify the periods to which claims are to relate;

(d) 5specify 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
10of 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

4 (1) 15Treasury 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;

(c) 20for collecting a repayment and any interest charged on it.

(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
25to a person but which ought not to have been repaid to the person.

Penalties for inaccuracies in claims

5 (1) This paragraph applies where—

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

(b) the inaccuracy is material, and

(c) 30condition A, B or C is met.

(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
35claim 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
40Customs.

(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).

Savings (Government Contributions) BillPage 7

(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
5this 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

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

(2) 10An 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
15with 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
20that 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
25the 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
30reference 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) 35was the plan manager of a Lifetime ISA at or after the time any of the
qualifying additions was made to that Lifetime ISA, or

(c) is the plan manager of the Lifetime ISA to which the bonus would be
or has been paid.

Part 3 40Charges on some withdrawals from Lifetime ISAs

Withdrawals not triggering charge

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

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(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));

(c) 5at a time when the investor is suffering from a terminal illness;

(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) 10Treasury 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
15a withdrawal of investments representing the whole or part of the
addition, and

(c) the withdrawal is made within a period—

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

(ii) of a duration specified in the regulations.

(4) 20Treasury 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) 25Treasury 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;

(c) 30when a person is to be considered to be suffering from a terminal
illness;

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

Charge when unlisted withdrawal made

8 (1) 35Except 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) 40the 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) 45that plan manager and the investor are jointly and severally liable to
HMRC for the amount payable under sub-paragraph (2), and

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(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
5sub-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-
10paragraph (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
15severally 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
20ISA, 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-
25paragraph (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
30attributable, directly or indirectly, to bonuses.

Payment of withdrawal charges

9 (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
35withdrawals from the Lifetime ISA;

(b) about steps to be taken by the plan manager of a Lifetime ISA before
relying on paragraph 7;

(c) specifying the date by which a withdrawal charge must be paid;

(d) charging interest on a withdrawal charge that is due but unpaid;

(e) 40for collecting a withdrawal charge and any interest charged on it, or
otherwise for the purpose of fully implementing paragraph 8;

(f) for refunding a withdrawal charge or any interest paid on it.

(2) The provision that may be made under sub-paragraph (1)(a) includes (in
particular) provision about—

(a) 45the information to be included in a return;

(b) the form of a return;