Draft legislation has been announced which will allow tax free treatment of ISAs to continue after the account holder's death.
Under the current rules ISAs lose their tax free status when the owner dies, this means that income tax and capital gains tax may have to be paid by the estate. It also means that many banks automatically close the ISA account and transfer the money into a new account.
The ability to retain the deceased's ISA accounts and the tax free benefits will be welcome news for savers and beneficiaries of their estates.
It will provide that, subject to certain time limits, personal representatives and beneficiaries or legatees should not face Income Tax or Capital Gains Tax on investments retained in an ISA during the administration of a deceased saver’s estate