Overview
- A surviving spouse or civil partner receives an additional ISA allowance equal to the deceased’s ISA value, allowing those savings to remain tax-sheltered for them.
- Common-law partners are not eligible under the spousal rule, which applies only to legally married spouses or civil partners.
- If ISA assets are left to anyone other than a spouse or civil partner, the account is frozen and loses ISA status after probate, so future returns become taxable.
- ISA funds remain part of the estate for IHT, with thresholds of £325,000 plus a £175,000 residence band and transferable unused allowances that can shield up to about £1 million for couples.
- The current £20,000 annual ISA limit is set to drop to £12,000 from April 2027, with £8,000 for stocks and shares ISAs and a cash ISA exemption for savers aged 65 and over.