23rd December 2014 at 10:17am
ISAs took a turn in the spotlight in the Autumn Statement earlier in December, after the new flexible rules for pensions dominated financial headlines for much of the year.
There were two bits of positive news for ISA savers.
First off, the annual allowance is to go up to £15,240 for tax year 2015/16. And there’s still several months left to use this year’s ISA allowance of £15,000.
But the big news was the proposal for the inheritable ISA allowance.
At the moment, an ISA is a purely individual savings plan. This means the income tax and capital gains tax benefits come to an end when someone dies.
New rules from 6th April 2015 will change that. While the final details are due out in the new year, the broad intention is for a surviving spouse or civil partner to have an enhanced ISA allowance. Their ISA savings limit will be boosted by an additional ISA allowance representing the date of death value of the ISAs held by their late spouse or civil partner.
Although the new rules don’t come into full effect until 6th April 2015, they will apply where an ISA saver dies on or after 3 December 2014. This partial back-dating will potentially benefit some of the spouses or civil partners of the 150,000 ISA savers who die each year, according to government figures.
This wasn’t the first improvement made to ISAs in recent months. Since 1st July 2014, it has been possible to use all of the current £15,000 ISA allowance for stocks and shares, cash, or a combination of the two.
If 2014 was the year pension reforms made pensions more flexible, with better inheritance rules, the same might now be said for ISAs too.
This is not financial advice. Law and tax rules may change in the future. A Stocks and Shares ISA is an investment. Its value can go up or down and it may be worth less than you paid in.