Autumn Statement 2014: The government has announced that, from April 2015, if an individual savings account (Isa) holder dies who is in a marriage or civil partnership, their spouse or civil partner will inherit the Isa tax benefits.
For deaths on or after the 3 December, surviving spouses will receive an additional Isa allowance, equal to the amount the deceased spouse had in their Isa, which can be used from 6 April 2015.
Previously, if an Isa holder died their ISA savings would lose their tax advantages, even if a couple was saving together.
Chancellor George Osborne also announced that the Isa allowance limit will increase to £15,240 from April 2015. This is a rise from the £15,000 announced at the 2014 Budget.
The changes to the starting rate of savings tax also means those earning under £15,600 will not need to pay tax on any of their savings income.
Danny Cox, chartered financial planner at Hargreaves Lansdown, said: “Couples almost invariably manage their money jointly using individual tax wrappers, such as an Isa, to shelter their savings and investments from tax.
“This change has righted a wrong in the tax system which was the source of deep frustration and additional cost for surviving spouses.”