Sharing ISA allowances

jsc77

Hi all

I have read many articles stating that married couples effectively get £40,000 of ISA allowance between them. I've searched for an answer to the below, but can't find anything conclusive.

Is this the same for non-married couples, i.e. can I put money into my partners ISA if I have fully used my allowance for the year?

Thanks

eskbanker

There's no sharing as such, each individual has a £20K annual allowance.

If any individual chooses to give some of their money to another individual by paying into an ISA in their name, then there's nothing in any rules to prevent this (whether married or not), but just bear in mind that it's no longer legally your money....

bowlhead99

As the name suggests, an ISA 'individual savings account' is a personal account of an individual, and the subscription limit is £20k per person per year

Although a married couple would be able to save or invest £40k into their personal ISAs between them per year, it is not literally a shared limit where Mrs A can put £25k nto her ISA one year because Mr A only put £15k into his. You still have your two separate limits and each person's ISA can only receive £20k of new money in any tax year.

However, as most marriages share the family wealth between spouses, and spouses can freely give each other gifts of any size without any inheritance tax or other consequences, a married couple who are planning out their financial circumstances might be quite happy to say that if Mr A is not going to use the last £5k of his annual limit, Mrs A will just give him £5k of her cash so that they can both put in £20k each in their own ISAs and maximise the amount of money that they can protect from tax each year.

Although an ISA only belongs to one person and isn't 'joint', a convenient feature for married couples is that if one spouse dies with (e.g.) £60k of ISA, the surviving spouse will be given a one-off extra allowance of £60k that year on top of their usual subscription limit. This would allow them to put extra money into their own ISA and preserve the same total size of ISA that they already had between them before the first person died. The principle is that married couples share their lives and face the world together as one family unit, and can plan for that accordingly.

From the above, it follows that married couples can plan together how best to maximise each person's allowance to get their family finances into the best position, and although technically the money belongs to one or other of them depending on whose name is on the account, they can really make a good job of maximising their tax free savings or investments between them by giving money to each other from time to time, to put into the most efficient accounts as if they just had one big 'family' set of assets. Even if they get divorced, if they've been married a reasonable amount of time the split of who gets what might have 50:50 as a sensible start point, so the couple might not care whose bank or investment account the money is sitting in.

So, you may hear people say, "remember, a married couple can put up to £40k into their Isas between them each year", just like they may say, "remember, a married couple can put up to £80k into their pensions between them each year (subject to salary levels)".

Whereas:

If you are not married to your partner, you can of course still give your partner £5k to stuff into their own ISA if you would like to do that. They would probably be grateful for the gift. But when you give money to someone else, and the two of you haven't gone so far as committing to be married in sickness and in health until death us do part etc etc, you might consider there to be a risk that they wouldn't pay it you back.

If you do choose to put your money in their ISA account, it's clearly not going to be seen as your money any more (because it's in an account with someone else's name on it). And unlike with married couples, if they die - even if you inherit their money- you won't get an extra allowance to stuff their ISA contents back into your own ISA.

You can put money wherever you like, but I personally wouldn't stuff my partner's ISA or pension allowances for them with my own money if they couldn't afford to fill them with their own money and we hadn't committed to be seen as a married couple in the eyes of the law. Obviously different people see their relationships differently and many run joint accounts when they are living together unmarried, but most of my unmarried friends who have joint accounts with their partners do also have their own personal accounts and savings for themselves.