MSE News: New rules mean your ISA won't die with you (if you have a spouse): Autumn S

Former_MSE_Paloma

The surviving spouse will be able to inherit their partner's ISA, keeping its tax-free status, George Osborne said today...

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New rules mean your ISA won't die with you (if you have a spouse): Autumn Statement 2014




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gadgetmind

This is great news and dersisks another area of our retirement plans.

colsten

However, the cash itself will still count towards the value of the deceased person's estate (which is the value of everything they own, including property and cash in the bank) to calculate inheritance tax.

That's academic for the surviving partner, as long as they live in the UK, isn't it?

HMRC wrote:

Married couples and registered civil partners are also allowed to pass assets to each other during their lifetime or when they die without having to pay Inheritance Tax. It doesn't matter how much they pass on - as long as the person receiving the assets has their permanent home in the UK. This is known as spouse or civil partner exemption.
http://www.hmrc.gov.uk/inheritancetax/intro/transfer-threshold.htm

Rollinghome

Also announced was:

"From 6 April 2015, surviving spouses will be able to invest as much into their own ISA as their spouse used to have, on top of their usual allowance, and so will be better able to secure their financial future and enjoy the tax advantages they previously shared." http://www.telegraph.co.uk/finance/autumn-statement/11268384/Autumn-Statement-savings-and-Isas.html

Which seems to mean that widows and widowers will have a double ISA allowance, which isn't clear from the MSE article.

As many people are already unable to take full advantage of even the current £15k annual ISA allowance that of course may not benefit many widows and widowers, especially after their previous joint pension income is reduced.

noh

Rollinghome wrote: »

Also announced was:

"From 6 April 2015, surviving spouses will be able to invest as much into their own ISA as their spouse used to have, on top of their usual allowance, and so will be better able to secure their financial future and enjoy the tax advantages they previously shared." http://www.telegraph.co.uk/finance/autumn-statement/11268384/Autumn-Statement-savings-and-Isas.html

Which seems to mean that widows and widowers will have a double ISA allowance, which isn't clear from the MSE article.

As many people are already unable to take full advantage of even the current £15k annual ISA allowance that of course may not benefit many widows and widowers, especially after their previous joint pension income is reduced.

No.
The budget statement is not very clearly worded.
What it is trying to say is that the widow or widower has an additional one off allowance on top of theirs equal to the value of the deceased spouses ISA on the date of death.
There is no doubling of the annual allowance.

Rollinghome

noh wrote: »

No.
The budget statement is not very clearly worded.

"Not very clearly worded" is a very generous interpretation.

DiggerUK

Not bad news for Digger Mansions, but not great news either.
Why not extend the principle to National Savings as well? That would make us happier.
..._

TheTracker

MSE News: New rules mean your spouse's ISA won't die with them (if you have a spouse)

Yippee.

Archi_Bald

Looking forward to seeing further details, such as

1. how will transfers work, specifically will there be in-specie transfers from person A to person B?
2. what happens if the ISA has been willed to somebody other than the surviving spouse

I have a feeling this hasn't yet been thought through as you can find absolutely no details on the web yet

Archi_Bald

DiggerUK wrote: »

Not bad news for Digger Mansions, but not great news either.
Why not extend the principle to National Savings as well? That would make us happier.
..._

Write to Gideon.

noh

Archi_Bald wrote: »

Looking forward to seeing further details, such as

1. how will transfers work, specifically will there be in-specie transfers from person A to person B?
2. what happens if the ISA has been willed to somebody other than the surviving spouse

I have a feeling this hasn't yet been thought through as you can find absolutely no details on the web yet

1 We don't know yet.

2 The same as now. The ISA wrapper is lost.