I need to transfer assets including stocks and shares ISAs to a settlor interested settlement. I understand that holdover relief does not apply to a settlor interested settlement but if the assets transferred are ISAs is that deemed disposal exempt because it is an ISA? ( I appreciate it can’t continue to exist as an ISA once transferred to the settlement!)
Nicholas Sewell
BEVIRS Solicitors.
My understanding is that an ISA is only transferable/assignable under certain conditions, which do not include the ISA owner transferring it to any other person during their life time.
Accordingly, in order to settle the assets within an ISA, it seems to me that the ISA owner must first withdraw those assets, whether in fact or in effect, at which time they are deemed to have acquired them as at the value on the date of the withdrawal.
In a non-settlor interested settlement, whether or not a holdover relief should be sought might then depend upon the length of time between the withdrawal and the settlement of the assets.
I would also be inclined to the view that the earliest such assets could be settled would be the date upon which they “exit” the ISA, although appreciate that there is case law supporting a gift of shares subject to a pre-emption right by way of a declaration of trust, which did not trigger the pre-emption rights as there was no attempt to transfer the legal title. It may be that the assets within an ISA can be settled even whilst within the ISA, which potentially gives rise to some interesting tax related issues, including establishing the date on which they were “settled” and the value to be paced on them for IHT purposes.
If not already too late, I would advocate only settling the assets once they are free of the ISA wrapper.
Paul Saunders