People with ISAs should be aware of positive new changes to the tax rules that apply to the individual savings accounts (ISAs).
Following the Autumn Statement, ISAs can now be passed on after death to a spouse tax-free. The accounts had become previously subject to the usual income and capital gains tax on the death of a spouse.
Ellie Milner, a wills and inheritance tax specialist at Langleys Solicitors, says the move represents good news for ISA savers.
“From now, when an ISA saver who is married or in a civil partnership dies, their spouse or civil partner will inherit their tax advantages,” said Ellie.
“The tax ‘wrapper’ stays on the ISA for the benefit of partners. This could mean big tax advantages to the surviving spouse of a saver who had invested in ISAs over many years.”
The surviving partner will have an extra one-off ISA allowance equal to the amount their deceased spouse had in their account which they can use from April 2015, allowing them to ensure that the amount held by the deceased spouse in ISAs can remain as ISAs as opposed to ending up in regular savings accounts.