Call Richard Cook: 07770 575 122

email: richard@theinvestmentandretirementcoach.co.uk

New ISA death benefits – what you need to know

The Chancellor’s announcement that ISAs can now be passed to a surviving spouse or civil partner was welcome news but, as ever, the devil is in the detail and many families may lose out if they do not take the appropriate action.

The starting point for many people’s medium term investment strategy has been to maximise tax efficiency by using their ISA (and prior to that PEP) annual allowances. The outcome for those who have been in a fortunate enough position to maximise their investment each year is a totally tax free fund well in excess of £250,000. Most of us are well short of that figure but the tax free benefits of ISAs are still well worth having. Prior to the 5th December 2014 the tax benefits of ISAs were entirely lost on death. Now the tax benefits can be passed on, an ISA account has become even more valuable.


However things are never as simple as they seem. Nothing happens automatically. What will happen is the spouse (civil partner) will be given an additional one-off ISA allowance equal to the value of the deceased’s ISA holdings. This enables them to re-shelter assets which were in a spouse’s ISA into an ISA into their own name.

This one-off allowance will be available on the 6th April in the tax year following the grant of probate. With so much to think about following the death of a loved one this could easily be overlooked.

So here are my action points:-

1) Think about redrafting your wills so that ISA accounts are specifically left to your spouse. Or, you could simply leave a “letter of instruction” with your will – see below for how we can help with this.

2) Review your ISA investments. Now that they can provide a continuing tax free income to your widow/widower the underlying investment strategy may not be as effective as it should be.

3) Look again at your Inheritance Tax planning strategy. Your ISA account will still be subject to 40% inheritance tax on the second death but there may be other assets you could safely put into trust without prejudicing your financial future.

4) If you have Investment Bonds from which you are taking regular withdrawals did you know you could save inheritance tax by putting them into trust without giving up your right to those withdrawals? This is working well for many clients and may now be possible for even more as the tax free income from the ISA will definitely leave the survivor better off.

So, to summarise, it is definitely good news but only if you make sure your executors/dependents know your wishes and what they need to do.


The absolutely essential thing you should do is file a “letter of instruction” with your will alerting your executors to this welcome change in legislation and giving them some action guidelines. For a free sample letter just contact us with ISA Death Benefits in the subject and we will reply with a sample.

If you would like a free 20 minute telephone discussion about how this will effect your Investment and IHT planning strategies just click the box on the top right of the screen.

Finally a big favour please – put your name and email address in the box below so that I have your permission to send you more useful information. And if you have found this really useful use the icons on the top right to share with your friends.


This document and our on going services are not personal advice. We'll give you all the help and guidance you need to make your investment and retirement decisions, but we can't advise you. If you're not sure whether you need regulated financial advice we can put you in touch with a suitably qualified and experienced regulated adviser. Because we are not regulated by the Financial Conduct Authority you will not have access to the Financial Ombudsman Service in respect of any complaints. If you use one of the "no advice" on line services to handle investment transactions they will be Regulated and you will have access to the Ombudsman and The Financial Compensation Scheme in respect of their services. The value of investments/pension plans can fall or rise depending on market performance. The Retirement Team and The Investment and Retirement Coach are trading names of Capture Success Ltd Reg No 01825075 Tel 07770575122

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