This boost is through utilising the Additional Permitted Subscription
Additional Permitted Subscription allows savers to make additional contributions to their ISA(Image: Shared Content Unit)
The tax-free allowance for cash ISAs remains at £20,000, but savers can push past that figure through the use of legal yet largely unknown rule.
This is through utilising the Additional Permitted Subscription (APS) – an increased ISA allowance available to a surviving spouse or civil partner.
Essentially, it allows them to make additional contributions to their ISA, equivalent to the value of their deceased partner’s ISA, up to a certain point.
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Sarah Coles from Hargreaves Lansdown said: “These inherited allowances aren’t always well understood, but can be incredibly valuable – potentially protecting tens of thousands of pounds from tax.”
Following the death of someone with an ISA, their accounts become what’s known as “continuing ISAs”.
These continue to accrue growth or interest for up to three years.
APS rules allow for the surviving spouse or civil partner to inherit the extra tax-free ISA allowance equal to the value of their late partner’s ISAs at death.
This is in addition to their own £20,000 ISA limit.
To be eligible, you must have been legally married or in a civil partnership and living together at the time of death.
Claims must be made within three years of your partner’s death or 180 days following completion of their estate administration, whichever is later.
For those that want to boost their savings the fastest way possible, experts are advising Brits to utilise Stocks and Shares ISA.
According to financial experts at Motley Fool : “A grand a month translates into £12,000 a year. And if we’re following the classic 4% withdrawal rule, that means a portfolio needs to be worth around £300,000 to supply this.
“Obviously, that’s not pocket change and might make this seem like a fruitless endeavour. However, the good news is, even with only £500 to spare each month, most households can gradually build to this target over time, thanks to compounding returns.
“When looking at the long-term performance of the FTSE 100, the UK stock market’s historically provided an average return of 8% a year.
“Investing £500 a month at this rate when starting from scratch would eventually reach the target £300,000 in around 20 years. That means even someone who’s just turned 40 should still have enough time to get the ball rolling for their retirement.”