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AS 2014: Isas to be passed on tax-free at death

Isa savings will keep their tax-free status when passed on to a spouse at death, the Government has announced in today’s Autumn Statement.

Chancellor George Osborne announced the Government will legislate to allow an additional Isa allowance for spouses or civil partners when an Isa saver dies, equivalent to the amount held in Isa savings on their death.

He said: “At the moment, when someone dies, the savings in their Isa lose their tax-free status and their spouse starts paying tax on that money.

“From today, I can announce that when someone dies, their husband or wife will be able to inherit their Isa and keep its tax-free status.”

The Government also announced it will consult on whether to allow crowdfunded debt-based securities into Isas and how this could be implemented. 

Tisa operations director Carol Knight says: “Allowing the transfer of Isa assets to spouses and civil partners on death provides a fairer outcome, especially for women in retirement, and is one we have long advocated.

“Often a wife or civil partner will have savings in a husband’s name and can lose out significantly from the current rules. Allowing Isa savings to be transferable without leaving the Isa wrapper will enhance the greater flexibility introduced earlier in the year and act as a further incentive to save in Isas.”


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. That seems to be a very fair one

  2. Nothing anywhere (that I’ve yet picked up) about the Conservatives’ “aspiration” to raise the IHT Nil Rate Band threshold in the direction of £1m. That’s a biggie. The rest is largely nibbling at the edges.

  3. Looks like a trap set for Labour. They can’t very well remove any of the proposals for ISAs or Pensions without looking mean. Providing choice is always viewed as positive. However ; Partner died so we want to tax their ISA / Partner died so we want to tax the pension they left to you / Partner died before 75 so we want to tax your pension fund is not so positive. However one other issue is that pensioners have been insulated from the financial crisis across the board(apart from in the reduction of savings rates). This is another extreme act of generosity (to go with the new pensioner bonds), is it because they tend to vote!!

  4. @Paul Howarth. Actually I think its all an attempt to encourage more pensions saving. Pensions looked very unappealing to basic rate paying employees prior to March. GO has added lots of small tax breaks that will cost very little for most people but remove the feeling of State control and unfair interference.

  5. @Soren Lorenson, I agree entirely and wasn’t disparaging the government’s attempts for more freedom. I was however pointing out that it has been done in a suitably political way which leaves a future government little room to amend this without considerable fallout and bad publicity. Once people feel they have entitlements to anything such as this it quickly becomes their unalienable right.

    I think that this is a sensible move albeit that in a fair number of cases it will cost very little, ie Those with Equity ISAs have dividend payments which are to all intents and purposes are taxed anyway and very limited numbers pay CGT due to gains over their allowance. In addition in most cases the likelihood is that the inheritor of ISAs will be older and so will benefit for a relatively limited period. It is in fact astute political manoeuvrings a little like the other reforms ie the welcome pension freedoms happening to lead to an increased tax take.

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