What types of savings arrangement qualify as linked savings arrangements under section 704 of ITTOIA 2005?

Section 704 defines two categories of linked savings arrangement for SAYE interest exemption: national savings arrangements, which are government-backed schemes operated under the National Loans Act 1968 and National Debt Act 1972, and institutional arrangements, which are provided by qualifying banks or building societies in the private sector.

What is a national savings arrangement under section 704 ITTOIA 2005?

A national savings arrangement is one where contributions are paid to raise money under section 12 of the National Loans Act 1968, governed by regulations under section 11 of the National Debt Act 1972. It provides for repayment of contributions together with interest in accordance with those regulations, covering government-backed SAYE savings schemes administered through National Savings.

What is the difference between a bank arrangement and a building society arrangement under section 704?

A bank arrangement involves contributions paid to a qualifying bank as defined in section 991(2)(b) of the Income Tax Act 2007, with the bank as provider. A building society arrangement involves contributions invested in shares of a building society, with the society as provider. Both are institutional arrangements requiring authorisation under section 707.

What is the key difference between national savings arrangements and institutional arrangements for SAYE purposes?

The main practical difference is that providers of institutional arrangements must be authorised under section 707, whereas national savings arrangements require no such authorisation. Additionally, HMRC may impose specific requirements on institutional arrangements before certifying them under section 705, reflecting that they are operated by commercial entities rather than the government.

Income Tax (Trading and Other Income) Act 2005 section 704

Types of arrangements and providers

Section 704 defines the types of savings arrangement that can qualify as linked savings arrangements for the purposes of SAYE interest exemption, and identifies who the "provider" is in each case.

A linked savings arrangement is either a national savings arrangement (run under the National Loans Act 1968 and the National Debt Act 1972) or an institutional arrangement provided by a bank or building society.
A national savings arrangement involves contributions paid to raise money for the Treasury, governed by National Debt Act regulations, with repayment of contributions plus interest made in accordance with those regulations.
An institutional arrangement is either a bank arrangement (contributions paid to a qualifying bank as defined in ITA 2007) or a building society arrangement (contributions invested in shares of a building society), with the bank or society being the "provider" respectively.
Unlike national savings arrangements, institutional arrangements require the provider to be authorised, and HMRC may impose additional requirements before certifying an institutional arrangement.

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