Investments  

Societies lay out details of Isa inheritance policy

Societies lay out details of Isa inheritance policy

Three industry bodies have teamed up to publish a set of guidelines to help individuals understand the new rules granting people additional Isa allowances following the death of a spouse or civil partner.

In the 2014 Autumn Statement, chancellor George Osborne announced that Isa assets could be passed on to surviving spouses of a deceased saver so that they could benefit from an additional allowance. The government confirmed the new rules at the end of March.

The new rules, which came into force this Monday (6 April), give the surviving spouse an ‘additional permitted subscription’, a one-off Isa allowance, equal to the value of the deceased’s Isa savings at the date of death, which does not count against the normal Isa subscription limit.

Article continues after advert

The Tax Incentivised Savings Association, British Bankers Association and the Building Societies Association’s guidelines outline key information on the additional permitted subscription and what it means for surviving spouses and civil partners. It states:

• death would need to have occurred on or after 3 December 2014;

• allowance subscriptions can be made to either cash or investment Isas;

• for cash subscriptions, the allowance is available for three years after death;

• providers are not obliged to accept subscriptions, but must pass information to another provider;

• the allowance can be transferred once to another Isa provider and subsequent cash or investments can be transferred in the usual way.

Carol Knight, operations director at Tisa, explained that approximately 150,000 married Isa holders die each year.

“We see it as a much fairer outcome and is one we have long advocated,” she stated, adding that often a wife or civil partner would have savings in a husband’s name and lost out significantly under the previous rules.

“Allowing Isa savings to be transferable without leaving the Isa wrapper will enhance the greater flexibility and will act as a further incentive to save within Isas.”

peter.walker@ft.com