TISA, BBA and BSA publish customer leaflet for deceased spouses obtaining additional ISA allowance
TISA the financial services membership association, in conjunction with the British Bankers Association (BBA) and the British Societies Association (BSA) has published a customer leaflet to help individuals understand the new rules, which came into effect on 6 April 2015, granting people additional ISA allowances following the death of a spouse or civil partner.
In the 2014 Autumn Statement, Chancellor George Osborne announced that ISA assets could be passed on to surviving spouses of a deceased ISA saver so that they could benefit from an additional ISA allowance.
The new rules give the surviving spouse an ‘additional permitted subscription’ (APS), a one-off ISA allowance, equal to the value of the deceased’s ISA savings at the date of death, without this amount counting against the normal ISA subscription limit. Usually couples save from joint incomes, so the main advantage is that it offers bereaved individuals the chance to secure their financial future and enjoy the tax advantages they had previously shared.
The leaflet outlines key information on the APS and what it means for surviving spouses and civil partners:
- Anyone whose spouse/civil partner has died on or after 3 December 2014 and at the date of death is eligible
- APS allowance subscriptions, referred to as payments, can be made to a Cash ISA and/or a Stocks and Shares ISA
- The APS allowance can be used from 6 April 2015. In most cases, for subscriptions made in cash, the allowance is available for three years after the date of death
- The APS allowance can be used with the deceased’s ISA provider or another ISA provider. Not all ISA providers will accept APS allowance subscriptions, but they are obliged to pass relevant APS allowance information on to another ISA provider. Some ISA providers will allow payments to be made in instalments whereas others only allow a lump sum
- ISA providers will require certain information from the spouse / civil partner to open an ISA. They will also require an application form to use the APS allowance
- APS allowance can be transferred to another ISA provider, subject to the other ISA provider agreeing to accept. It can only be transferred once and only where no subscriptions have been made under the allowance
- After an APS allowance payment has been made, the cash and / or investments relating to that subscription can be transferred to another ISA.
Carol Knight, Operations Director at TISA said:
“Approximately 150,000 married ISA holders die each year and so these changes will benefit spouses or civil partners of ISA holders who die on or after 3 December 2014 by increasing the amount that they can save by offering the tax advantages in an ISA wrapper.
“We see it as a much fairer outcome and is one we have long advocated. Often a wife or civil partner will have savings in a husband’s name and can lose out significantly under the previous rules whereby investments held by deceased ISA savers lost their tax-free status before they were inherited. Allowing ISA savings to be transferable without leaving the ISA wrapper will enhance the greater flexibility and will act as a further incentive to save within ISAs.”
TISA has produced the leaflet ‘Obtaining additional ISA allowances following the death of your spouse or civil partner’ in conjunction with BBA and BSA is also available on TISA’s website here.
For more information, the HMRC bereavement helpline team can be contacted on 0300 200 3300 and will be able to respond to any detailed enquires about dealing with the APS allowance or the deceased estate.
Ends
Issued on behalf of TISA by Newgate Communications
Alistair Kellie – Telephone: 0207 680 6558/Email Alistair.Kellie@newgatecomms.com
Sara Lyons – Telephone: 0207 680 6543/Email Sara.Lyons@newgatecomms.com
Notes for Editors
TISA
TISA is a not-for-profit membership association operating within the financial services industry. We represent the interests of over 145 member firms involved in the supply and distribution of savings and investment products and services.
TISA has a highly successful track record in working cooperatively with government, regulators, HMT, DWP and HMRC to improve the performance of the industry and the outcomes for consumers. Policy and regulation continues to be the major focus for our members with regard to corporate responsibility.
TISA and its members’ remit is evolving into a clearer focus on pro-active consultation in the regulatory world in order to influence policy and associated regulation before its creation, rather than reacting to issued policy directives. This will help to ensure a more considered policy creation from the authorities.
Website: www.tisa.uk.com