Pensioners given ISA inheritance tax heads up

Pensioners given ISA inheritance tax heads up February 19

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Pensioners have been warned that although money invested in ISA’s is exempt from tax in their lifetime, they do not offer protection from inheritance tax (IHT).

Office of National Statistics (ONS) data shows that there are currently around 165,000 investors aged 70 who hold ISA’s and Peps valued at in excess of £100,000 - all of which could be eligible for IHT.

Financial services provider Way Group also calculates that one sixth of total annual IHT tax take comes from Peps and Isas - which equates to approximately £500,000.

“Over recent years, the government has made it increasingly difficult for investors to mitigate IHT on their homes, and in our view is also misleading investors – many clearly believe there are substantial tax benefits in retaining PEP and ISA portfolios, but this can be anything but the case,” Paul Wilcox, chairman of Way Group, told Mortgage Solutions.

The UK government’s revenues from IHT have increased from £2 billion in 2001 to £4 billion in 2006.

For the current tax year - which runs from April 6th 2006 to April 5th 2007 - 40 per cent of the value of an individual’s estate over £285,000 is payable as an inheritance tax.

The figure is raised annually.

Written Exclusively by AdFero for ISA Guides

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