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Insights // 18 November 2015

Passing on ISA Benefits After Death

Partner Jonathan Gater, in our Probate, Tax & Trusts team, discusses passing on ISA genefits after death.

The spouse or civil partner of someone who has died can now inherit the tax benefits of their Individual Savings Accounts (ISAs).  The way this works is that the spouse or civil partner is entitled to an extra ISA allowance on top of the standard allowance.  This extra allowance is equal to the value of the ISAs on the date of the death of their spouse or civil partner.  This extra allowance is referred to as the “additional permitted subscription”.

The surviving spouse or civil partner does not necessarily have to inherit the investments that were held in the ISAs.  They do not even need to be a beneficiary in the Will.  However, they must have been living with the person who has died at the time of their death.

This additional allowance was introduced with effect from 6 April 2015, if the original ISA investor died on or after 3 December 2014.  The surviving spouse or civil partner can make use of this extra allowance for up to three years from the date of death (or until 180 days after Probate is granted, if that is later).  The surviving spouse or civil partner has three options:-

1.         Invest the money they have inherited into an ISA.

2.         Move investments from elsewhere into an ISA, up to the additional permitted subscription.

3.         Invest cash into a new ISA.

In the case of options 2 and 3, the investment can be made as soon as valuation of the spouse or civil partner’s ISA is available and they have applied to have the additional allowance.  In appropriate circumstances, this means that the new ISA investment could be made before Probate has been granted.

For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800. 

This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.

Jonathan Gater

Jonathan Gater

Joint Managing Partner, Wills, Probate Tax & Trusts & Court of Protection

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