Should I close this ISA?
Richie7
Posts: 77 Forumite
Hi,
My dad holds money in an ISA, and was wanting to give that money now to myself and his wife. Effectively closing/ending his ISA.
My question is what would the implications of this be? And is there good way to do it?
I was thinking of opening ISA accounts for my mum and I, then transferring the money from dad's ISA to ours. Is this possible? Keeping it in a tax free bubble as so to speak?
Or will he need to close the ISA, withdraw his money completely, then give it to us? And are there any Tax implications with doing this?
I can't seem to find much information on closing ISA's, as everyone basically says never to do it!
Any advice would be appreciated.
Rich.
My dad holds money in an ISA, and was wanting to give that money now to myself and his wife. Effectively closing/ending his ISA.
My question is what would the implications of this be? And is there good way to do it?
I was thinking of opening ISA accounts for my mum and I, then transferring the money from dad's ISA to ours. Is this possible? Keeping it in a tax free bubble as so to speak?
Or will he need to close the ISA, withdraw his money completely, then give it to us? And are there any Tax implications with doing this?
I can't seem to find much information on closing ISA's, as everyone basically says never to do it!
Any advice would be appreciated.
Rich.
0
Comments
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My question is what would the implications of this be?
None whatsoever from the ISA point of view. If the amount of the gift is within the annual gift allowance or can be classed as a gift from income (if his income can support it) then no issues. If not, then it would be classed as a PET for IHT purposes. This only becomes an issue if he dies within 7 years and his estate is over the IHT threshold.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
ISA money isn't transferable between individuals (except for a non-applicable provision on death of spouse) so it would be a case of withdrawing and closing.
No tax implications other than the potential for future inheritance tax liabilities if he passes away within seven years of giving you a large amount (sorry, this is all getting a bit morbid!).
How much are you talking about here?0 -
None whatsoever from the ISA point of view. If the amount of the gift is within the annual gift allowance or can be classed as a gift from income (if his income can support it) then no issues. If not, then it would be classed as a PET for IHT purposes. This only becomes an issue if he dies within 7 years and his estate is over the IHT threshold.
It would be more than the gift allowance, but long term there won't be any IHT issues.ISA money isn't transferable between individuals (except for a non-applicable provision on death of spouse) so it would be a case of withdrawing and closing.
No tax implications other than the potential for future inheritance tax liabilities if he passes away within seven years of giving you a large amount (sorry, this is all getting a bit morbid!).
How much are you talking about here?
It's upwards of £30k, so approximately £15k each.
What I was worried about was any tax implication of closing the ISA? As it's a substantial amount. My dad is elderly and been retired for a long time, and naturally the interest over the last few years hasn't been substantial. So well within his personal allowance too. I assume all would be ok? As in he wouldn't lose anything on closing the ISA?0 -
What I was worried about was any tax implication of closing the ISA?
ISAs are tax free.but long term there won't be any IHT issues.
<snip>
My dad is elderly and been retired for a long time
It isn't the length of time you hold on to it for. It is the time the gift is made until date of death. That has to be at least 7 years to be exempt from IHTI am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
It's a complicated situation regarding his health, but he just wants me and my mum to have the money, and is adamant we do so. Fulfilling his wishes basically, to keep him happy.
Thanks for all your responses anyway. I will close the ISA down and then place it into ISA's in our names. We are both yet to use our allowance for this year.0 -
You might wish to consider whether it's actually sensible to put the money into cash ISAs anyway, given the derisory interest paid on these at the moment. Other options such as regular saver and current accounts will give a better percentage return on your money (see http://www.moneysavingexpert.com/savings/which-saving-account for further details) so don't be unduly swayed by the fact that the money is currently in an ISA....
And I hesitate to mention it, given the way such threads often escalate, but if his health is 'complicated' to the extent that he may need care in the foreseeable future then giving his money away could be considered to be deprivation of assets. Anyway, not trying to stir things up here, but worth familiarising yourself with the term just in case.0
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