ACCA Advanced Taxation (ATX) Practice Exam

What legislative provisions exist for ISAs in regard to residency status?

1. Non-residents can also invest without restrictions.

2. Only UK residents are permitted to invest in ISAs.

3. Residents of the EU are treated as eligible for investments.

4. Residency status does not affect investment opportunities.

The correct answer is: Only UK residents are permitted to invest in ISAs.

The correct answer revolves around the exclusivity of Individual Savings Accounts (ISAs) to UK residents. Under UK tax law, ISAs are specific tax-efficient savings and investment accounts available primarily to individuals who are considered residents of the UK for tax purposes. This means that only individuals with a confirmed residency status within the UK are eligible to open and contribute to ISAs. While other options may mention non-residents or individuals from the EU, the legislation clearly stipulates that ISAs are not accessible to those outside of UK residency status. Non-residents cannot open new ISAs or continue contributing to existing accounts once they no longer meet the residency requirements. Therefore, the accuracy of the choice indicating that only UK residents can invest in ISAs is grounded in the legal framework governing these financial products.