If you are widowed and your spouse/civil partner was an ISA saver then did you know that you benefit from the right to retain their ISA wrapper?
Under the previous system, when someone died, any savings held in an ISA automatically lost their tax-free status, and the tax benefits were lost forever. This meant that the surviving partner would have to start paying tax on any returns or income earned from it, which could add up to a significant sum if the ISA holder had been saving for many years.
The new rules started to apply from April 2015 and enable an ISA allowance to be transferred to a surviving spouse or civil partner. For example, if your late husband held £10,000 of savings in an ISA, you as the surviving spouse now have the right either to transfer the ISA into your own name (if that is in accordance with his Will) or (if that is not in accordance with his Will), you can fund the ISA with your own money, up to the limit of his savings (£10,000). This is known as an Additional Permitted Subscription (APS) and is a separate allowance to your own individual ISA allowance.
Here are the key facts:-
- The value of the APS is limited to the value of the deceased’s ISA at their date of death
- The transfer is available whether or not you inherited the cash ISA from your spouse
- The transfer can be made into a cash or a stocks and shares ISA
- Not all ISA providers offer the APS service
- Transfers must be made within 3 years of the date of death or, if later, 180 days of the completion of the administration of the estate
- You will need to inherit the non-cash ISA from the deceased to be able to transfer the non-cash ISA allowance to you.
- Transfers to the current ISA provider must be made within 180 days of the date when the stocks were transferred to you
Get in Touch
We are experts in estate administration and this is an example of the specialist advice that we offer to beneficiaries. If you would like to speak to a member of our Private Client team about this or any other matter in relation to the administration of an estate, please contact Vanessa Ruparel at [email protected] or on 0118 958 9711.