Inheriting ISA's - The New Death Benefits
Author: Joanna Pashley
Did you know that it is now possible for you to inherit your partner’s ISA savings? Before 6 April 2015, when a person died the ISA(s) tax benefits died with them. The effect being that if a spouse inherited money that they wished to reinvest in their own name, they could only reinvest into another ISA, up to their own ISA allowance for that year.
However, this rule was considered to be unfair so from 6 April 2015 the rules changed and a surviving spouse/civil partner is now entitled to an extra allowance equal to the value of the ISA(s) which their deceased partner held.
This applies even if the surviving partner does not actually inherit the money/ investments which the ISA(s) comprised of.
The new rule applies to anyone whose spouse/civil partner died on or after 3 December 2014, with a one-off additional ISA allowance, equal to the value of the deceased partner's ISA allowance at the date of their death, being available.
Additionally, where a deceased partner had a number of ISAs with different providers, a separate ISA allowance is available with each ISA provider.
This is known as an Additional Permitted Subscription (APS) allowance.
There are different options available to the surviving spouse/civil partner who has an APS allowance available. Depending on their circumstances, they may wish to stay with the deceased's ISA provider, but they can also put money into their own current ISA(s), with a different provider, or open up a brand new ISA with a completely new provider.
However, not all ISA providers will accept an APS allowance subscription, so it is important to check the availability with each ISA provider. Nevertheless, any ISA provider who doesn't accept the subscription, must pass on the details about the allowance available to another ISA provider.
It is also important to note that there are time limits for the use of APS allowances. A surviving spouse/ civil partner, will have three years from the date of death, or if longer, 180 days from when the personal representatives complete the administration of the deceased's estate.
For further advice or assistance in dealing with an estate, please contact a member of our Private Client team.