5 February 2015
According to Nationwide Building Society, London could be the biggest beneficiary when new rules enabling spouses to inherit their partner’s ISA allowance are introduced in April, closely followed by Northern Ireland.
Around 150,000 married ISA savers die each year, according to Government statistics, although current rules mean their savings lose the tax-efficient wrapper upon death. However, from 6 April, the surviving spouse will be able to increase their ISA savings by the value of the deceased partner’s ISA balances. The option is available in respect to customers who have passed away on or after 3 December 2014, so long as they were in a marriage, or civil partnership, and not separated.
Nationwide customer data shows the average customer with a cash ISA on death during 2014 was aged 81. Regionally, the average cash ISA balance held with Nationwide on death last year was £16,674 in London, while the figure for Northern Ireland was £16,521. There is a significant gap in balances between the two areas and other UK regions, with the next highest area being the East Midlands at £14,515 – more than £2,000 less. The area with the lowest recorded ISA balances upon death last year was the North West, where the average ISA balance upon death was £13,540 – more than £3,000 less than those in London.
The list of regions and average ISA balances is:
Greater London: £16,674
Northern Ireland: £16,521
East Midlands: £14,515
South East: £14,981
South West: £14,918
North East: £13,970
West Midlands: £13,964
North West: £13,540
Nationwide, which accounted for more than 20 per cent of market change in ISA balances at the end of last year (November), opened 550,000 new ISA accounts between April and September 2014. The Society successfully campaigned for ISA parity, with the Government introducing New ISA rules in July that raised the total ISA limit from £11,880 to £15,000 (going up to £15,240 from 6 April 2015) for both cash and stocks & shares ISAs. The change also enabled savers to transfer their ISA balances freely between cash and stocks & shares.
Richard Napier, Nationwide’s Director of Savings, said: “Changes to the ISA rules are entirely welcome as people will be able to take comfort that their surviving partner will be able to reinvest the full value of their ISA savings in a tax-efficient way. This is incredibly important, particularly as the majority of customers will be well into their retirement – a time when finances might be tighter. An ISA is an excellent option in saving for both the short and longer term, and is a great way to make the most of your money. And with the annual ISA allowance increasing to £15,240 from April, people are able to make the most of the benefits an ISA provides”.
Nationwide offers a range of ISAs to meet the varying needs of our customers, from instant access to fixed rate cash ISAs in addition to stocks and shares ISAs. For more, please see: http://www.nationwide.co.uk/products/isas.