The Chancellor’s Autumn Statement – A Private Client ViewDecember 5, 2014
ISAs – Transfer to spouses on death
When an individual who has an individual savings account (ISA) dies, their spouse or civil partner will receive an additional ISA allowance equal to the value of the deceased’s ISAs. ISA status still ends on the account holder’s death. It appears that this will still be the case in relation to the deceased’s own ISAs, but that the surviving spouse or civil partner will be able to use the additional allowance in relation to their own ISAs, regardless of whether they have inherited the funds in the deceased’s ISAs. This measure will apply in relation to deaths on or after 3 December 2014, but the surviving spouse or civil partner’s allowance will only be increased from 6 April 2015.
It should also be noted that the ISA subscription limit will increase to £15,240 and the junior ISA limit to £4,080 on 6 April 2015. The current limits are £15,000 and £4,000 respectively. These rises are in line with the consumer prices index (CPI), which is the default basis for indexation unless the government decides to override it.
The inheritance tax exemption that already exists for members of the armed services who die or whose death is hastened by injury while on active service has been extended to those working in the emergency services and humanitarian aid workers responding to emergencies. This extension will have effect for deaths after 19 March 2014.
The existing exemption for medals and awards for valour or gallantry will be extended to all medals and awards given to members of the armed services or the emergency services and also awards made by the crown for achievements and service in public life. This will have effect from 3 December 2014.
The government had originally intended to introduce a single settlement nil rate band to be shared by all the trusts established by a settlor in their lifetime or on death. This proposal had been heavily criticised by many working in the area of inheritance tax planning as an unfairly retrospective and unduly complex solution to inheritance tax avoidance. The government’s proposals have been unexpectedly shelved. The Chancellor still intends to bring in measures to limit the use of multiple trusts to avoid inheritance tax and to simplify the inheritance tax rules for relevant property trusts in the Finance Bill 2015. We will have to wait and see how the government legislates in this area.
For further information please contact the property department at Cleaver Fulton Rankin 028 9024 3141
Please note; the content of this article is for information purposes only and further advice should be sought from a professional legal advisor before any action is taken.