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    • CaW
    • By CaW 15th Jul 17, 3:11 PM
    • 5Posts
    • 4Thanks
    CaW
    Inherited ISA allowance HELP!
    • #1
    • 15th Jul 17, 3:11 PM
    Inherited ISA allowance HELP! 15th Jul 17 at 3:11 PM
    I am trying to navigate the rules regarding the inherited ISA allowance (Additional Permitted Subscription). Can anyone with direct experience advise? It appears if I want to retain the tax-free status of my partner's ISA funds I will have to open a Legacy/Inheritance ISA available from only about half a dozen providers. However, the rates on these ISAs are terrible (the best I could find was 0.75%). My question is - has anyone managed to transfer funds from one of these specialist ISAs to another ordinary cash ISA with a better rate? My local Skipton branch (where my deceased partner had an ISA) said the funds had to stay in their Legacy ISA (0.5%) and couldn't be transferred to another ISA with a better rate. But their own T&Cs and the official info I have seen suggests otherwise. As far as I understand, funds saved under this APS allowance should be treated the same as any other previous years' ISA funds so in theory I should be able to put them in any ISA that accepts transfers in.

    If any journos from the main site are reading this - there is a real lack of practical, accessible info on this matter anywhere online. (And what there is is mostly out of date) So at a very difficult time I am having to navigate in-depth T&Cs and speak to bank staff who don't seem to be across the rules and I feel very aggrieved at being offered such meagre interest rates!! It feels like they are discriminating against bereaved savers (or maybe I am just being oversensitive!)

    Anyway, thanks for reading! Any help from people who have been through it would be gratefully received.
Page 1
    • badger09
    • By badger09 15th Jul 17, 5:10 PM
    • 5,896 Posts
    • 5,233 Thanks
    badger09
    • #2
    • 15th Jul 17, 5:10 PM
    • #2
    • 15th Jul 17, 5:10 PM
    I am trying to navigate the rules regarding the inherited ISA allowance (Additional Permitted Subscription). Can anyone with direct experience advise? It appears if I want to retain the tax-free status of my partner's ISA funds I will have to open a Legacy/Inheritance ISA available from only about half a dozen providers. However, the rates on these ISAs are terrible (the best I could find was 0.75%). My question is - has anyone managed to transfer funds from one of these specialist ISAs to another ordinary cash ISA with a better rate? My local Skipton branch (where my deceased partner had an ISA) said the funds had to stay in their Legacy ISA (0.5%) and couldn't be transferred to another ISA with a better rate. But their own T&Cs and the official info I have seen suggests otherwise. As far as I understand, funds saved under this APS allowance should be treated the same as any other previous years' ISA funds so in theory I should be able to put them in any ISA that accepts transfers in.

    If any journos from the main site are reading this - there is a real lack of practical, accessible info on this matter anywhere online. (And what there is is mostly out of date) So at a very difficult time I am having to navigate in-depth T&Cs and speak to bank staff who don't seem to be across the rules and I feel very aggrieved at being offered such meagre interest rates!! It feels like they are discriminating against bereaved savers (or maybe I am just being oversensitive!)

    Anyway, thanks for reading! Any help from people who have been through it would be gratefully received.
    Originally posted by CaW

    I don't have personal experience, thankfully but I think you're right.

    You can only initially use the APS with the provider of your late partner's ISA, or another provider who offers that particular ISA product. Having used the additional allowance, you can then transfer elsewhere, using the normal transfer process.

    See 6A starting on P90, but particularly 6A.6 on P95.

    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/603261/ISA_Lifetime_ISA.pdf
    • bigadaj
    • By bigadaj 15th Jul 17, 5:45 PM
    • 10,803 Posts
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    bigadaj
    • #3
    • 15th Jul 17, 5:45 PM
    • #3
    • 15th Jul 17, 5:45 PM
    A broader question is of course why you would want to hold money in any cash isa, better rates are available on current accounts and regular savers, though there are a few hurdles and management is required.

    Transferring into a stocks and shares or innovative finance USA would guve far better returns though with some risk.

    Waht is best for you depends on your exact situation so it's difficult to comment further without knowing this.
    • CaW
    • By CaW 16th Jul 17, 11:53 AM
    • 5 Posts
    • 4 Thanks
    CaW
    • #4
    • 16th Jul 17, 11:53 AM
    A question to timing...
    • #4
    • 16th Jul 17, 11:53 AM
    Thank you for the link. The key question for me now is how long I would have to leave the money in a Legacy/Inheritance ISA before I can transfer it to one with a top rate. And I can't find an answer to that. If I have to leave the money in for a year I'd lose about £1,000 in interest - so it is important to get it right! But if I can just open it, leave the money in for a couple of weeks and then move it to a market leading ISA then that would be worth doing.
    • CaW
    • By CaW 16th Jul 17, 12:01 PM
    • 5 Posts
    • 4 Thanks
    CaW
    • #5
    • 16th Jul 17, 12:01 PM
    Thanks
    • #5
    • 16th Jul 17, 12:01 PM
    Thanks bigadaj for your reply. The tax-free element is important to us as well as the low-risk nature of a Cash ISA. As you say, I may end up taking the money out of the ISA "wrapper" and investing it elsewhere. But I want to fully understand the APS rules/ inheritance ISA options before I do this. I am stubborn - I don't just want to take the money out of the ISA because the rules are complicated and bank staff (so far) dont seem to understand them - I want to do it because it is the best financial decision!!
    • xylophone
    • By xylophone 16th Jul 17, 12:23 PM
    • 24,519 Posts
    • 14,370 Thanks
    xylophone
    • #6
    • 16th Jul 17, 12:23 PM
    • #6
    • 16th Jul 17, 12:23 PM
    https://www.gov.uk/government/publications/isa-manager-bulletin-65/guidance-additional-permitted-subscriptions-for-the-spousecivil-partner-of-a-deceased-isa-investor
    • badger09
    • By badger09 16th Jul 17, 12:31 PM
    • 5,896 Posts
    • 5,233 Thanks
    badger09
    • #7
    • 16th Jul 17, 12:31 PM
    • #7
    • 16th Jul 17, 12:31 PM
    Thank you for the link. The key question for me now is how long I would have to leave the money in a Legacy/Inheritance ISA before I can transfer it to one with a top rate. And I can't find an answer to that. If I have to leave the money in for a year I'd lose about £1,000 in interest - so it is important to get it right! But if I can just open it, leave the money in for a couple of weeks and then move it to a market leading ISA then that would be worth doing.
    Originally posted by CaW
    I couldn't find that answer either, so presumably there is no such time limit. The complicated bit seems to be about using part of the APS only. If you are intending to use the whole amount in one go, I would do so, with Skipton, for ease.

    Then, relying on 6A 6 and 6A 7, apply to whichever new ISA provider you choose (obviously don't make any deposit) and ask them to transfer the (APS) ISA, ticking the box specifying 'Previous years' subscriptions only'. Then leave it to them to sort it out between them

    Good luck and please do post back with updates.
    • badger09
    • By badger09 16th Jul 17, 12:33 PM
    • 5,896 Posts
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    badger09
    • #8
    • 16th Jul 17, 12:33 PM
    • #8
    • 16th Jul 17, 12:33 PM
    xylophone

    The link in my post 2 is the up to date guidance.



    I beat xylophone to the relevant link
    • xylophone
    • By xylophone 16th Jul 17, 12:53 PM
    • 24,519 Posts
    • 14,370 Thanks
    xylophone
    • #9
    • 16th Jul 17, 12:53 PM
    • #9
    • 16th Jul 17, 12:53 PM
    The link in my post 2 is the up to date guidance.
    Yes - my link links to 3/2017

    This version of the ISA Guidance Notes for Managers provides guidance for the purposes of the rules to be applied from 6 April 2017, and in particular incorporates guidance on Lifetime ISAs and changes to subscription limits for ISAs and Junior ISAs.
    • Annikins
    • By Annikins 19th Dec 17, 9:17 PM
    • 2 Posts
    • 0 Thanks
    Annikins
    Inheritance ISA rates
    I have discovered that National Savings & Investments offer a rate of 1% but it is very difficult trying to get accurate information from them about it. The first person you ring says there is no limit to the amount you can put in and then the next person you speak to says you can only put in up to £20,000 (which is this year's allowance) which is hopeless if you have to put in all a deceased's entire ISA holding saved over the years. Even when speaking to someone from HMRC they didn't know the exact rules and it seems as if each building society makes it up as they go along. Also if you have to put the
    entire holding with one ISA manager this may go over the FSCS limit.
    • xylophone
    • By xylophone 19th Dec 17, 11:20 PM
    • 24,519 Posts
    • 14,370 Thanks
    xylophone
    Inheritance ISA rates
    I have discovered that National Savings & Investments offer a rate of 1% but it is very difficult trying to get accurate information from them about it
    Have you seen this?

    https://www.nsandi.com/files/published_files/asset/pdf/direct-isa-inherited-allowance-leaflet.pdf
    • CaW
    • By CaW 20th Dec 17, 11:58 AM
    • 5 Posts
    • 4 Thanks
    CaW
    My experience
    Hi Annikins,

    I'm the one who started this thread as I, like you, was having trouble getting accurate information about what to do with inherited ISA allowances (or Additional Permitted Subscriptions, as they are officially called).

    The first thing to say is very few people I spoke to in banks and building societies knew the rules. And some who thought they did were mistaken. I did my own research (following the links shared by forum users above and the banks' own terms and conditions), then politely insisted bank staff check with their ISA managers in head office. You probably won't feel like it after a bereavement (I know I didn't) but you may have to be quite determined.

    Here's what we did. We transferred our loved one's ISA allowances (which were with three different building societies) to one specialist inheritance ISA with the Skipton (who were VERY helpful and understanding). As the ISA paid less than 1%, as soon as the transfer was complete, we moved the money to a new ISA with the institution offering the best ISA rate at the time. This whole process took several weeks and we could only begin it once Probate was complete.

    Remember, once your money is in a specialist ISA that accepts inherited ISA allowances, you can then move it to ANY ISA that accepts transfers in, as the money is treated exactly the same as any of your previous years' ISA savings. See Point 6A.1 in the .gov document shared in a previous post. (I can't post links)

    So in your case, you should be able to transfer all of your loved one's ISA savings (not just £20,000) into the NS&I inherited allowance ISA. There is no mention of a limit in the PDF xylophone shared above. Insist staff members check with an ISA manager at head office (not just their supervisor in the call centre).

    Then, as the NS&I interest rate is so low, transfer your funds to new ISAs with providers offering better rates, making sure that funds remain within the FSCS limit.

    There may well be other ways of doing it, but based on my recent experience, I know this way (should!) work.

    Good luck. Come back if you have any questions.
    • badger09
    • By badger09 20th Dec 17, 12:35 PM
    • 5,896 Posts
    • 5,233 Thanks
    badger09
    @CaW

    Thank you for posting this update.

    I'm sure it will be really helpful to others facing the same issue, in what will inevitably be a stressful and upsetting time.
    • Keep pedalling
    • By Keep pedalling 20th Dec 17, 1:45 PM
    • 4,545 Posts
    • 4,968 Thanks
    Keep pedalling
    Hi Annikins,

    I'm the one who started this thread as I, like you, was having trouble getting accurate information about what to do with inherited ISA allowances (or Additional Permitted Subscriptions, as they are officially called).

    The first thing to say is very few people I spoke to in banks and building societies knew the rules. And some who thought they did were mistaken. I did my own research (following the links shared by forum users above and the banks' own terms and conditions), then politely insisted bank staff check with their ISA managers in head office. You probably won't feel like it after a bereavement (I know I didn't) but you may have to be quite determined.

    Here's what we did. We transferred our loved one's ISA allowances (which were with three different building societies) to one specialist inheritance ISA with the Skipton (who were VERY helpful and understanding). As the ISA paid less than 1%, as soon as the transfer was complete, we moved the money to a new ISA with the institution offering the best ISA rate at the time. This whole process took several weeks and we could only begin it once Probate was complete.

    Remember, once your money is in a specialist ISA that accepts inherited ISA allowances, you can then move it to ANY ISA that accepts transfers in, as the money is treated exactly the same as any of your previous years' ISA savings. See Point 6A.1 in the .gov document shared in a previous post. (I can't post links)

    So in your case, you should be able to transfer all of your loved one's ISA savings (not just £20,000) into the NS&I inherited allowance ISA. There is no mention of a limit in the PDF xylophone shared above. Insist staff members check with an ISA manager at head office (not just their supervisor in the call centre).

    Then, as the NS&I interest rate is so low, transfer your funds to new ISAs with providers offering better rates, making sure that funds remain within the FSCS limit.

    There may well be other ways of doing it, but based on my recent experience, I know this way (should!) work.

    Good luck. Come back if you have any questions.
    Originally posted by CaW
    I would love to know which top rate cash ISAs pay more than you get outside an ISA wrapper. Even allowing for tax you are generally better off holding your cash outside an ISA. The only reason I can see for maintaining the cash ISA is if you have plans to shift it into S&Ss at some not too distant date.
    • CaW
    • By CaW 20th Dec 17, 3:25 PM
    • 5 Posts
    • 4 Thanks
    CaW
    Thanks Keep Pedalling. Of course, each individual should do their own research to work out the best place to invest the funds they have inherited. Some may decide they don't want to take advantage of their spouse/partner's ISA allowance and move the money into a non-ISA product. But for people who have decided they want to keep the funds in an ISA, this was my experience of how to do it .
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