Death of Cash ISA holder

happybagger

Looked back a few pages but couldn't see this mentioned.

I'm currently dealing with the estates of two relatives and still awaiting probate for both.
I decided to leave the cash ISAs until the last so that they continue to earn what's a good rate tax free, having read that they can continue doing so as a "continuing ISA account" for up to 3 years and a day, or when an executor closes it or the estate is finalised.

https://www.gov.uk/individual-savings-accounts/if-you-die

However, when looking at Furness BS website terms for their ISA, which I was thinking of opening for myself, unrelated to the above, it states:

"Death of the investor

Interest earned on a Cash ISA after the date of death of the investor is not exempt from tax. However, there is no loss of exemption on interest arising before the date of death."

https://www.furnessbs.co.uk/savings/products/product-overview/3-year-isa

I presume Furness are incorrect then?

isasmurf

Sorry for your loss. 

It looks like Furness haven't updated their documentation from when the tax law was changed a few years ago. What they say is true only where the account holder died on or before 5 April 2018. 

Where an ISA holder dies after 5 April 2018, during the administration of their estate their ISA can continue to enjoy the tax exempt benefits as a 'continuing account of a deceased investor'. 

See HMRC ISA Managers Guidance Notes - Death of an Investor