Use Cases
This section shows how to cater to specific use cases relevant to tax wrapped products using the Investment API.
Additional permitted subscriptions (APS)
Use Case
APS, or Additional Permitted Subscription, is a special allowance introduced by the UK government that lets a surviving spouse or civil partner of a deceased ISA holder inherit their ISA tax benefits.
Normally, when a ISA holder dies, their ISA loses its tax-free status. However, with APS, the surviving partner can make an additional ISA subscription; on top of their normal annual allowance; equal to the value of the deceased's ISA(s) at the date of death. This means the surviving partner can continue to benefit from the tax advantages of ISAs, helping to preserve family wealth within a tax-efficient wrapper.
Handling
When an ISA holder dies, Upvest will support the full transfer out of the remaining value or contents of the ISA to the beneficiary’s own ISA. Upvest can not currently support incoming APS contributions where the ISA holder at Upvest is the beneficiary.
Tax year’s end - ISA allowance renewal
Use Case
The UK tax year starts at midnight on April 5th. Upvest will automatically renew active ISA allowances for upcoming tax year’s regulatory subscription limit.
Handling
At midnight on April 5th, the Investment API executes a check on Tax Wrapper status:
- If INACTIVE - No action
- If ACTIVE - The Investment API will emit
ISA_WRAPPER_ALLOWANCE.CREATEDevents, which provides the allowance details for the new tax year.
Allowances from past year, including flexible withdrawals, do not roll over to the new tax year.
ISA void & repair
Tax year’s end - ISA allowance renewal
Use Case
ISA managers are regulatory obliged to promptly identify and correct errors in the administration of Individual Savings Accounts. When issues such as over-subscriptions, incorrect account classifications, or invalid transfers occur; the ISA manager is responsible for voiding the erroneous transactions and initiating appropriate repairs to restore the account to a compliant state.
This process must be carried out in accordance with HM Revenue and Customs (HMRC) rules to ensure the account retains its tax-advantaged status and to avoid penalties for both the provider and the investor.
Handling
The Investment API supports the ability to reclassify previous ISA subscriptions and remove them from the tax wrapper.
Offboarding tax wrapped accounts
The existing offboarding flows can be leveraged to close a tax-wrapped account. Account groups for tax wrapped accounts will remain in an OFFBOARDING state until the applicable tax year has ended.
The tax wrapper status will transition to INACTIVE.
Tax residency changes
The status of the account group for tax wrapped accounts, relies on the user’s tax residency to remain eligible. Tax residency changes to non-eligible countries will result in the Tax Wrapper status transitioning to INACTIVE, preventing further deposits whilst allowing current value to be invested, sold and withdrawn.