Thousands of bereaved partners may be paying unnecessary tax bills after failing to take advantage of an ISA transfer allowance.
According to a Freedom of Information request obtained by financial provider Zurich, just 21,000 people took advantage of the little known saving scheme in 2017/2018. However, the Tax Incentivised Savings Association estimates that up to 150,000 married ISA holders die every year.
Since April 2015, it has been possible to absorb a deceased partner’s ISA savings without incurring a tax charge. This is called the Additional Permitted Subscriptions (APS) allowance.
For instance, if a person dies with £50,000 in an ISA, the surviving spouse would be eligible for a larger than usual ISA allowance for that tax year. In effect, the spouse would have an allowance of £70,000 instead of £20,000.
Many are not taking advantage of the allowance as they are either baffled by the rules or simply unaware of them.
If your spouse or civil partner has died and had left money in an ISA account, you can apply for the APS allowance either to the provider of the ISA they held, or to a different provider who agrees to accept the subscription.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.