Using my ISA savings now and not later

wittenhamclump

I'm very fortunate. 70 fit and should live 7 years more. 40% tax payer. My pension easily covers my outgoings and I can refill my ISA with the annual maximum. My wife has her own savings and will not need it if I die first. My last surviving parent died with a large ISA amount and then paid inheritence tax on it.
I want to give away some of my savings why shouldn't I use my ISA first and not have to worry about the tax implications?

Alexland

It certainly sounds like you are in a good position to make gifts however the recipient may still need to consider the inheritance tax risk.

Do you have any thoughts on how you would like to gift your money? If might be particularly effective to gift it to a registered charity?

Alex

The_Doc

You can gift money annually from "excess income" without worrying about IHT. This is on top of the £3K allowance per year.

As Alexland says, you can make larger gifts, but the recipient will have to pay IHT if you die within 7 years of the gift (over the £325K allowance).
There is also the Residence Nil Rte Band to be added (this is being phased in so value will change).

So overall, yes its a good plan to use non-pension savings as gift first. Use non-ISA first, then ISA (as growth is tax free), ensuring you keep enough cash for emergency fund.

badger09

OP

I'm a bit confused by your last sentence

"I want to give away some of my savings why shouldn't I use my ISA first and not have to worry about the tax implications?"

If you're a HR taxpayer, then surely it makes sense to give away non ISA savings first, thus reducing the amount on which you pay 40%?