ISA's in Estates

Trusts Discussion
1

I have what I thought was a simple question in relation to the tax status of ISA investments in an Estate but cannot find the answer.

FA2016 inserted section 694A into ITTOIA 2005, extending ISA tax advantages to administration period investments. What is the operative date please? Does it only apply where the death has taken place after 6th April 2016, or do investments belonging to a person who died prior to that date and which are still held by the Executors also benefit? If the latter, to my mind that suggests they (under the old rules) lost the tax benefits at death but re-acquired them on 6th April 2016 but that doesn’t seem right to me in which case, am I right in thinking that if the person died before 6th April 2016 then, irrespective of whether they are still being held by the PRs after that date, income and gains are taxable? Bit unfair for Mr Identical and his twin brother, Mr Identical, if one dies 5th April 2016 and the other, the very next day But then, who says tax is fair……

The explanatory memorandum to The Individual Savings Account (Amendment No.XX) Regulations 2017 (in draft) state that HMRC’s guidance notes for ISA providers “will” be updated to reflect the changes but this doesn’t help because, having just checked, these state that an ISA ceases on the death of an investor.

Have an Forum members had to deal with this yet?

Lesley Rance

Miller Hendry

2

Although of course it doesn’t necessarily follow, the announcement concerning the transfer of benefits to a surviving spouse re ISAs made in the Autumn Statement 2014 applied in respect of deaths on or after 3 December 2014 the date of the Autumn Statement 2014. If this is the approach re the new proposals, announced in the Autumn Statement 2015 on 25 November 2015, it would apply to deaths on or after 25 November 2015.

Just a thought.

Malcolm Finney

3

Unbeknown to me at the time I posted my initial query, SI2017 No.1089 was in the process of being rubber stamped in The Commons and “comes into force” 6th April 2018 i.e. is applicable to deaths from that date.

Lesley Rance

Miller Hendry

4

Yes, I found it at:

http://www.legislation.gov.uk/uksi/2017/1089/made

So I was close !!

Malcolm Finney

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