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Transferable ISA Allowance

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An individual Savings Account (ISA) is a savings account within which up to a certain limit interest is earned and capital gains made are free of tax.

One of the characteristics of an ISA is that it can only be held by an individual. An ISA account can never be a joint account.

Until recently where an individual holding an ISA died the tax free advantages of such a savings vehicle was lost from the date of death.

Since December 2014 however where an individual holding an ISA dies their surviving spouse or civil partner is eligible to invest what had been in the deceased's ISA in an ISA in their own name. This is known as an Additional Permitted Subscription Allowance ("APSA"). The APSA allows the spouse to pay in a sum equivalent to the sum held in the deceased's ISA at date of death including any interest into the spouse's own account even though they may have used up their own maximum annual allowance.

There are formalities that need to be addressed and there is a time limit. The APSA must be paid in within three years following the death of the deceased (or 180 days after the deceased's estate is settled if this is later).

This is a useful tax benefit and is in addition to an individual's own personal annual allowance.

For further information please contact our Private Client Team.

The information contained on this page has been prepared for the purpose of this blog/article only. The content should not be regarded at any time as a substitute for taking legal advice.