Please remember that the value of investments will fluctuate and returns may be less than the amount originally invested. Tax treatment depends on your individual circumstances and the ISA and tax rules can change. Whilst we may draw attention to certain investment products, we cannot know which of them, if any, is best for your circumstances and must leave that judgement to you. If you are unsure about the suitability of any investment you should seek professional advice.
In his Autumn Statement in December 2014, the Chancellor of the Exchequer, George Osborne, announced a new benefit for ISA investors: money held within an ISA wrapper can now be passed on to a spouse or civil partner, without losing the tax advantages.
With effect from 6th April 2015, for deaths on, or after, 3rd December 2014, the surviving spouse will have an additional, one-off ISA allowance, equal to the amount the deceased spouse had in their ISA. This is in addition to the normal ISA limit for an individual (currently £20,000).
If executors or beneficiaries want to take advantage of these rules, they should send the death certificate (and grant of probate if they have it) along with a covering letter to our client services team at the address below.
Chelsea Financial Services
St James’ Hall
Moore Park Road
Please note that the value for probate purposes will be as at the date of death not the value at the time of application. There is also a potential tax liability (on any gains and income received) between the date of death and the transfer into the ISA. This is because the ISA will first be unwrapped, as per the normal procedure in all deceased cases, before being re-wrapped under the spouse/civil partner’s name.
For example, if the ISA was worth £100,000 on date of death, the one-off ISA allowance would be £100,000. Even if the value of the portfolio rose to £102,000 before the beneficiary transferred the inherited investments, the one-off ISA allowance would still be £100,000 and the extra £2,000 would sit outside the ISA wrapper. However, a spouse/civil partner does of course have their own annual ISA allowance in addition to the inherited allowance so, using the same example, they could potentially invest the additional £2,000 into their own ISA allowance.
There is no deadline that the beneficiary must meet in order to inherit the ISA following death.
However, HMRC’s guidelines state that it must be completed within 180 days from the date on the Grant of Probate.
If you have any further questions, please contact our client services team on 020 7384 7300.