If you are a widow or widower you need to know about the new ‘inheritance Isa’
Thousands of widows and widowers could be missing out on a new tax break designed to keep the savings that their spouse built up out of the Revenue’s reach.
The Chancellor announced in his Autumn statement on December 3rd that if Isa savers died, bereaved spouses and civil partners would for the first time inherit an allowance equivalent to the value of their loved one’s tax-free pot.
So if a husband had £20,000 in an Isa when he died, his widow – rather than losing the tax-free status on the savings – could open a £20,000 inheritance Isa in her own name.
This is the case even if the original funds were used to pay for funeral costs or passed on to a child. The widow would be able to open an inheritance Isa – officially called an ‘additional permitted subscription’ – and put in her own cash up to the same amount.
The Chancellor said this would protect widows and widowers from falling incomes at a difficult time.
The new rules apply to deaths from December 3, 2014. However, the legislation did not come in to force until April 6 this year – with the result that thousands of widows and widowers will have cashed in their partners’ Isas
Of the 500,000 or so deaths in Britain each year, an estimated 150,000 are savers who are either married or in civil partnerships.
But relatively few widows and widowers have so far come forward to claim the inherited Isa allowance, It may be that their spouses are delaying applying for the allowance, but it may also be they are not aware of this right.’
If you need help or advice with your Financial Planning including the new pension changes please contact me,
Kind regards,
Debbie Day.
Mobile:07704311021 email:deb.day@hoskinfinancial.co.uk or visit debbiedayifa.co.uk
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