New ISA launched for people who inherit a savings pot.
Skipton Building Society has launched a new ISA, designed to help people take advantage of the new rules around inheriting ISAs from deceased loved ones.
The Skipton Legacy ISA pays 1.50% interest and doesn’t affect your own ISA limit (£15,240 for the 2015/16 tax year). Instead it involves using your Additional Permitted Subscription.
What are Additional Permitted Subscriptions?
Announced in the Chancellor’s Autumn Statement last December, Additional Permitted Subscriptions allow bereaved spouses and civil partners to inherit their loved one’s ISA savings.
APS allowance is calculated by totalling your loved one’s ISA contributions from previous tax years as well as the current one added to the interest they accrued up until the day they died.
Interest credited after death will be subject to deduction tax and not included in APS.
[SPOTLIGHT]Your APS allowance sits alongside your ISA allowance and you have three years to use it (or 180 days after the administration of the estate is complete, if this is later).
ISA rules don’t allow your spouse’s ISA to be transferred directly to you, but if funds are left to you, you can reinvest them in a Cash or Stocks and Shares ISA using your APS allowance.
You can invest with the ISA provider your spouse was with or a different provider, but you can only go with one under ISA rules.
Even if the funds are left to someone else, if you’re married or in a civil partnership at the time of their death and you’re still in the relationship, you are entitled to APS allowance.
Other ISA options
Skipton isn't the only savings provider to have deals set up for APS allowances. Santander's ISA Saver (for APS) pays 0.5% on balances above £1 and 1% on balances above £10,000, while Leek United Building Society pays 1.10%. Coventry Building Society pays a whopping 2.15% on its Additional Allowance ISA.
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