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it stops being a continuing ISA (completion of estate administration / third anniversary of date of death / all funds withdrawn).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.
1HMRC data obtained by Zurich, Jan 2019
INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM TAXATION, ARE SUBJECT TO CHANGE.