What bereaved spouses need to know about inheriting ISAs
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What bereaved spouses need to know about inheriting ISAs
Anyone whose spouse or civil partner died on or after 3 December 2014, is eligible for a one-off additional ISA allowance. This is achieved by what is called an ‘Additional Permitted Subscription’ (APS) and is in addition to the normal ISA allowance. The APS is equal to the value of the ISA on the date of death, if the investor died before 6 April 2018. However, if the investor died on or after 6 April 2018, their ISA will become a continuing ISA. This means the APS is equal to the higher value of the ISA on the date of the investor’s death or the value of the ISA on the date it stops being a continuing ISA (completion of estate administration / third anniversary of date of death / all funds withdrawn). The surviving spouse will therefore have the option of the highest value APS.
Research1 shows that, by not claiming their APS, six out of seven bereaved partners could be paying tax unnecessarily on ISA savings they inherit.
Claiming your APS
You can use the allowance in one go or as separate lump sums. However, time limits do apply.
1 HMRC data obtained by Zurich, Jan 2019
It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency.
Information is based on our understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.
Tax treatment is based on individual circumstances and may be subject to change in the future.
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