Transfer my S&S ISA to wife's account

Robie

Hi

Can I transfer my S&S ISA to my wife's account? Are there any tax implications of which I should be aware?

Thanks
Robie

Malthusian

No, not without losing your allowances, unless you pop your clogs.

You can encash your ISA and reinvest it using her ISA allowance (so you could move £35,240 to her between now and 6 April) but this would usually be a waste of ISA allowance, time out of the market and transaction costs.

Why do you want to move it into her name?

Robie

Thanks.

I don't understand the £35,240 figure though.

I don't mind losing this year's allowance if I can transfer to her account.

Now, what if I pop my clogs! What happens then? I presume everything under my name is sold and proceeds goes to my wife. So, the question is does the sale of my S&S ISA imply tax?

I am trying to reduce/sell my ISA so that my wife does not need to pay tax on my stuff.

lozzy1965

How does, or will, your wife pay tax on your stuff?

le_loup

ISAs sort of transfer to spouses upon death. (Bit complicated, but a fact). So your wife will not pay tax on an amount that you hold in ISAs when you die.

bowlhead99

Robie wrote: »

Thanks.

I don't understand the £35,240 figure though.

Your wife has a £15,250 ISA subscription allowance for the tax year 2016/7. So if you were to take money out of your own ISA and transfer it to her bank as a gift, she could contribute that money to an ISA in her own name by 5 April, the last day of the current tac year (assuming she hasn't yet used her 2016/7 subscription allowance).

The allowance is increasing to £20,000 a year for the tax year 2017/8. Your wife (and you) will therefore have new allowances to use on 6 April. So, if you had gifted her another £20,000 of cash, she could put that into an ISA then.

Total, assuming she still has all £15,240 of the current year allowance available, is £35,240.

I don't mind losing this year's allowance if I can transfer to her account.

If you want to sell up, get the money in your bank account, give her the money, and have her invest it in her own name, you can do that. You just can't transfer directly from yours to hers.

Now, what if I pop my clogs! What happens then? I presume everything under my name is sold and proceeds goes to my wife.

The proceeds go to whoever is named in your will as getting them, or if you die in the absence of a will, they go to whoever they should go to under the laws of intestacy.

If you die owning an ISA, your wife will get an extra one-off ISA subscription allowance equal to the value of your ISA on the date of your death, which she can use to make a big one off extra contribution into an ISA with ISA manager who ran your ISA at the date of your death.

So, for example if you die next week with £100k of ISA assets, and she only had £15,240 ISA subscription allowance remaining for the 2016/7 tax year, she will get an extra £100k subscription allowance so could use her inheritance (or any other money she has lying around) to contribute £115,240 into her own ISA, instead of normal £15240.

Or, she could just use her normal £15,240 this year (because there are not many weeks left in this tax year and probate might take a while), and next year use her £20k normal allowance and the £100k special allowance to do £120k total.

So, the question is does the sale of my S&S ISA imply tax?

Any interest, dividend, capital gain or other income which were generated while the money/assets were inside an ISA, are not taxable just because you closed the ISA. They are historic, in the past, and tax exempt because they happened inside an ISA.

However, when you take the money out of an ISA and do something else with it before your wife puts it in her own ISA, any interest/dividends / gains earned during that period are taxable.

But if the money is not outside the ISA very long before being put into a new one, it is not going to generate much/anything in the way of taxable income before she wraps it up again in an ISA. And even if it did, presumably you both have interest and dividend allowances and capital gains exemptions which you may not be using.

I am trying to reduce/sell my ISA so that my wife does not need to pay tax on my stuff.

As your stuff is tax exempt while it is in your ISA, and she will "inherit" a nice big one-off ISA subscription entitlement when you die, into which she could put her inherited money into pretty quickly - it is probably not an urgent matter, unless you are expecting to die very soon and you are expecting probate or will disputes to take a very long time to resolve.

If you are not expecting to die very soon, how do you know she won't die before you? She could have a tragic freak accident in a few weeks time. Then if you had just spent a load of effort moving everything out of your name into hers, it would be somewhat frustrating because you have not achieved anything - still have the assets in a dead person's ISA. Then it's *you* who inherits the assets and extra allowance and has to put the inherited proceeds back into an ISA wrapper.

Malthusian

Robie wrote: »

I am trying to reduce/sell my ISA so that my wife does not need to pay tax on my stuff.

ISAs are free of tax on income and gains, and bequests to your spouse are free of Inheritance Tax. Which tax are you thinking of?

Robie

bowlhead99 wrote: »

Your wife has a £15,250 ISA subscription allowance for the tax year 2016/7. So if you were to take money out of your own ISA and transfer it to her bank as a gift, she could contribute that money to an ISA in her own name by 5 April, the last day of the current tac year (assuming she hasn't yet used her 2016/7 subscription allowance).

The allowance is increasing to £20,000 a year for the tax year 2017/8. Your wife (and you) will therefore have new allowances to use on 6 April. So, if you had gifted her another £20,000 of cash, she could put that into an ISA then.

Total, assuming she still has all £15,240 of the current year allowance available, is £35,240.


If you want to sell up, get the money in your bank account, give her the money, and have her invest it in her own name, you can do that. You just can't transfer directly from yours to hers.


The proceeds go to whoever is named in your will as getting them, or if you die in the absence of a will, they go to whoever they should go to under the laws of intestacy.

If you die owning an ISA, your wife will get an extra one-off ISA subscription allowance equal to the value of your ISA on the date of your death, which she can use to make a big one off extra contribution into an ISA with ISA manager who ran your ISA at the date of your death.

So, for example if you die next week with £100k of ISA assets, and she only had £15,240 ISA subscription allowance remaining for the 2016/7 tax year, she will get an extra £100k subscription allowance so could use her inheritance (or any other money she has lying around) to contribute £115,240 into her own ISA, instead of normal £15240.

Or, she could just use her normal £15,240 this year (because there are not many weeks left in this tax year and probate might take a while), and next year use her £20k normal allowance and the £100k special allowance to do £120k total.

Any interest, dividend, capital gain or other income which were generated while the money/assets were inside an ISA, are not taxable just because you closed the ISA. They are historic, in the past, and tax exempt because they happened inside an ISA.

However, when you take the money out of an ISA and do something else with it before your wife puts it in her own ISA, any interest/dividends / gains earned during that period are taxable.

But if the money is not outside the ISA very long before being put into a new one, it is not going to generate much/anything in the way of taxable income before she wraps it up again in an ISA. And even if it did, presumably you both have interest and dividend allowances and capital gains exemptions which you may not be using.

As your stuff is tax exempt while it is in your ISA, and she will "inherit" a nice big one-off ISA subscription entitlement when you die, into which she could put her inherited money into pretty quickly - it is probably not an urgent matter, unless you are expecting to die very soon and you are expecting probate or will disputes to take a very long time to resolve.

If you are not expecting to die very soon, how do you know she won't die before you? She could have a tragic freak accident in a few weeks time. Then if you had just spent a load of effort moving everything out of your name into hers, it would be somewhat frustrating because you have not achieved anything - still have the assets in a dead person's ISA. Then it's *you* who inherits the assets and extra allowance and has to put the inherited proceeds back into an ISA wrapper.

I can't go into detail here but there you go.