Death taxes on ISAs
One of the more welcome announcements as part of the Autumn Statement in December 2014 was a new measure concerning the inheritance of Individual Savings Accounts (ISA). With effect from 3 December 2014, if an ISA (also known as ‘New ISAs’) saver in a marriage or civil partnership dies, their spouse or civil partner inherits their ISA tax advantages. HMRC has now published a policy paper on the impact of these changes.
From 6 April 2015, surviving spouses will be also be able to invest as much into their own ISA as their spouse used to have, on top of their usual allowance without this amount counting against the normal ISA subscription limit.
These measures have been put in place to help ensure bereaved individuals secure their financial future and enjoy the tax advantages they previously shared, following the death of their spouse or civil partner. These measures will make ISAs even more appealing to investors. There are estimated to be around 150,000 married ISA holders that die each year (equivalent figures are not available for civil partners).
The New ISA currently has an annual investment limit of £15,000. For the 2015-16 tax year, the limit will increase to £15,240.