Vital ISA Tax Break for the Bereaved

17th January 2019

Vital ISA Tax Break for the Bereaved

Only 14% of those eligible to do so are taking advantage of their right to inherit their partner’s ISA according to recent figures provided to financial firm Zurich by HMRC. A new law in 2014 gave widows, widowers and civil partners the right to transfer their partner’s ISA under the Additional Permitted Subscription (APS) rules.

How does it work?

Instead of inheriting the ISA itself, the surviving partner is given a one-off extra allowance equal to the value in the deceased partner’s ISA account at the time of death. So if the deceased partner had £15,000 in ISA investments on the date of their death, the surviving partner mould be able to invest this on top of their own £20,000 annual ISA allowance.

isa bereaved tax relief

This means that the surviving partner can hold the APS in their own name and they will pay no tax on the interest.  To be eligible the date of the deceased’s partner’s death must be on or after 3 December 2014 and the allowance must be used within 3 years of the date of death or 180 days after completion of the estate’s administration if later.

With the average inherited ISA value purported to be £55,000, it is estimated that the average saver could earn hundreds of pounds in interest by use of this tax relief.

 

All information correct at time of distribution January 2019.

 

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