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Isa inheritance confusion as thousands of bereaved partners missing out

Warnings have been raised that thousands of bereaved partners could be paying unnecessary  tax on inherited Isa savings, as new figures show only a small proportion are taking advantage of allowace rules.

Figures obtained under a Freedom of Information Act request by Zurich found that 21,000 people used new rules – which have been in place since 2015 to grant an extra Isa allowance equivalent to the value of their Isa account when their partner dies – to inherit their balance last year.

However, this is only around 14 per cent of the 150,000 married Isa holders that the Tax Incentivised Savings Association estimates pass away each year.

Based on an average inherited Isa value of £55,000, the means savers are being charged around £110 in tax if they do not take advantage of the rules.

Zurich head of retail platform strategy Alistair Wilson says: “Despite being in its fourth year, the take-up of this tax break looks shockingly low.

“People who miss out on the allowance will be hit by a tax bill that quickly eats into the returns on their savings and slows down the growth of their nest egg.

“Although it’s not nice to think about a loved one passing away, speaking to a financial adviser can help you pass on wealth efficiently and ensure you or your family don’t pay any more tax than needed.”

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  1. There are several likely reasons for this including (but not restricted to)adviser failings, investor failings and solicitor failings.

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