The autumn statement finally arrived on 3rd December and most of the headlines were grabbed by the changes to stamp duty and pensions, but in the background details have begun to emerge on how new ‘inheritable’ ISA rules will operate. In this article we look at some top tips for Inheriting ISAs.
If an ISA holder dies on or after 3 December, their spouse or civil partner will be allowed to invest an amount equivalent to the deceased’s accrued ISA holdings into their own ISA via an additional allowance. This is in addition to their normal annual ISA limit for the tax year and will be claimable from 6 April 2015.
Continued tax free investment
This means the surviving spouse can continue to enjoy tax free investment returns on savings equal to the deceased ISA fund, but it doesn’t have to be the same assets which came from the deceased’s ISA which are paid into their spouses new or existing ISA. The surviving spouse can make use of their increased allowance from any assets.
By not linking the transferability to the actual ISA assets, it provides greater flexibility and doesn’t have an adverse impact on estate planning that you may have already put in place. For example, had it been the actual ISA itself which had to pass to the spouse to benefit from the continued tax privileged status, it could have meant many thousands of ISA holders having to amend their existing Wills. Where the spouse was not the intended beneficiary under the Will or where assets would have been held on trust for the spouse, they would miss out on the tax savings on offer.