New ISA death benefits explained

10 June 2015 - In his Autumn Statement in December 2014, the Chancellor of the Exchequer, George Osborne, announced a new benefit for ISA investors: money held within an ISA wrapper can now be passed on to a spouse or civil partner, without losing the tax advantages.

With effect from 6th April 2015, for deaths on, or after, 3rd December 2014, the surviving spouse will have an additional, one-off ISA allowance, equal to the amount the deceased spouse had in their ISA. This is in addition to the normal ISA limit for an individual (£15,240 for 2015/16).

If executors or beneficiaries want to take advantage of these rules, they should send in the death certificate (and grant of probate if they have it) along with a covering letter to their ISA provider.

Please note that the value for probate purposes will be as at the date of death not the value at the time of application. There is also a potential tax liability (on any gains and income received) between the date of death and the transfer into the ISA (as the ISA wrapper is technically removed during the interim before being replaced).

There is no deadline that the beneficiary must meet in order to inherit the ISA following death.
However, HMRC’s guidelines state that it must be completed within 180 days from the date on the Grant of Probate.