Inherited ISA allowance HELP!

CaW

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 (And what there is is mostly out of date) So at a very difficult time I am having to navigate in-depth T&Cs and speak to bank staff who don't seem to be across the rules and I feel very aggrieved at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.

badger09

CaW wrote: »

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.

I don't have personal experience, thankfully:o 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

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

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

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

https://www.gov.uk/government/publications/isa-manager-bulletin-65/guidance-additional-permitted-subscriptions-for-the-spousecivil-partner-of-a-deceased-isa-investor

badger09

CaW wrote: »

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.

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

xylophone wrote: »

https://www.gov.uk/government/publications/isa-manager-bulletin-65/guidance-additional-permitted-subscriptions-for-the-spousecivil-partner-of-a-deceased-isa-investor

xylophone

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



I beat xylophone to the relevant link:j:j:j:p

xylophone

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

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

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