Inherited ISA's

Mavis123

Can anyone answer this query for me please? My husband seems to think he has read that if you inherit your spouse's ISA's you will be charged Inheritence tax on the whole amount. I was under the impression that it just reverts back to a taxable account once the person is deceaced. If he is right I cannot see the point of putting your savings in an ISA if your other half loses that much money on inheriting! A

dunstonh

An ISA is part of your estate and is subject to IHT rules. Those IHT rules currently state that transfers between spouse incur no IHT. Its on second death that they tend to fall foul of IHT.

MoneyTown

At death the ISAs are just seen as another asset and are taxed as normal. No special taxes on them.

tradetime

There is no inheritance tax payable when estates pass from spouse, this would include ISA'a or anything else imho

DeepSporran

Mavis123 wrote: »

If he is right I cannot see the point of putting your savings in an ISA if your other half loses that much money on inheriting! A

ISAs are not designed to reduce/avoid inheritance tax. They're intended to reduce capital gains tax and income tax. Not the same thing at all.

McSaver

The ISA tax free status is lost when the holder dies and its just paid out to anyone that is due to inherit the cash.

dunstonh

Or in the case of stocks and share ISAs, stock transfers are possible with a number of providers.