Using an ISA for estate planning

Planning ideas to help clients who are committed ISA investors plan for inheritance tax.

Helping ISA investors with estate planning

Many clients wrongly assume that their ISA is free from inheritance tax. In fact, a client’s ISA is included in their estate for inheritance tax purposes.

Certain investments that qualify for Business Property Relief (BPR) can be held in an ISA. For those clients comfortable with the risks of BPR investing, this means they can retain the lifetime benefits of their ISA while planning for inheritance tax. Read about some of the risks.

Let’s look more closely at planning ideas that could help clients use their ISA to plan for inheritance tax.

Planning ideas

Planning ideas for clients

ISA investors

Scenario

Clients who’ve built up large ISAs and have an inheritance tax liability can be reluctant to sell down their ISA investments.

Opportunities

Clients can hold certain shares in an ISA that qualify for inheritance tax relief. They could move some or all their ISAs into an inheritance tax-efficient portfolio.

Solutions

Octopus AIM Inheritance Tax ISA

Additional Permitted Subscriptions

Scenario

Clients who survive their spouse could make an additional ISA subscription matching the value of the ISA their spouse owned at death.

Opportunities

Clients can invest up to the value of their spouse’s ISA into a new ISA of their choosing. This extra allowance is available to a surviving spouse whether they inherit their spouse’s ISA or not, and can be used to invest in an inheritance tax-efficient ISA.

Solutions

Octopus AIM Inheritance Tax ISA

Risks

Risks to keep in mind

Capital is at risk

The value of an investment, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest.

Tax relief can’t be guaranteed

Tax treatment depends on individual circumstances and tax rules could change in the future. Tax relief depends on portfolio companies maintaining their qualifying status.

The investment may be volatile and difficult to sell

The shares of AIM-listed and unquoted companies could fall or rise in value more than other shares listed on the London Stock Exchange’s main market. They may also be harder to sell.

Contact us

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Speak to a member of our team to discuss tax-efficient options for ISA investors who are interested in estate planning.
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Key documents

Key documents

Octopus AIM Inheritance Tax Service brochureDownload
Octopus AIM Inheritance Tax Service product overviewDownload
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