Following the Autumn Statement, spouses and civil partners are able to inherit their partners ISA allowance in the event of death. This was thought to be a welcomed benefit to ISA savings as a wealth management strategy, however, it seems the dots still need to be dotted and t’s still crossed with exactly how it will work.
Timing issues
As with everything “timing is of the essence”. Whilst the news of being able to inherit a partner’s ISA allowance on death is still considered helpful, the draft regulations have uncovered a couple of points for consideration.
1) At present it is unclear as to what happens between the date of death and the date the new subscription is made. This could leave the ISA open to tax as part of the estate.
2) Because the subscription value is fixed at the date of death, transfers relating to non-cash holdings will fluctuate in value before the new subscription is made. This could result in a different investment value on transfer, especially if both spouses or civil partners had fully utilised their ISA allowances.