Axa Self Investor has called on providers who levy exit fees to remove them for those who inherited their Isa investments.
The firm stated this is an unfair charge and surviving spouses should not be hit with any penalties on their inherited Isa assets, or indeed any inherited investment, because they wish to move or consolidate assets.
With effect from 3 December 2014, if an Isa investor dies, his or her spouse or civil partner inherits their tax advantages.
During his Autumn Statement, the chancellor stated: “From today, I can announce that when someone dies, their husband or wife will be able to inherit their Isa and keep its tax free status.”
A surviving spouse now benefits from an additional one-off Isa allowance equal to the total amount the deceased held in their Isa at the date of death.
This means the surviving spouse can reinvest an equivalent amount into their own Isa to preserve the tax advantages that had previously been enjoyed.
However, Axa pointed out that things are not always as straightforward as they appear, with some providers levying exit penalties.
Adrian Lowcock, head of investing at Axa Self Investor, argued that given advances in technology, there is no longer a strong argument for levying exit penalties as the administration required is minimal.
“In cases where there is a charge, it’s most likely to be because the provider has not invested sufficiently in their processes - customers should not have to pay for a providers’ lack of investment in technology.
“Even if a provider does charge exit penalties, there is simply no reasonable excuse to charge surviving spouses penalties for transferring away,” he continued, adding that those that continue to do so will no doubt hide behind small print.
Mr Lowcock noted that Axa Self Investor only charges a platform fee.
While specific inheritance exit fees were hard to come by for the whole market, information provided by the Lang Cat consultancy revealed that several platforms still charge Isa product exit fees.
These included Alliance Trust Savings (£100 plus VAT), Hargreaves Lansdown (£25 plus VAT), iDealing (£60 plus VAT), James Hay’s Modular iPlan (£50 plus VAT), Strawberry (£25 plus VAT), Tilney Bestinvest (£50 plus VAT) and X-O (£50 plus VAT).
peter.walker@ft.com
