Lootman wrote:Bouleversee wrote:Depending on the day/week I check, my ISAs are around 7 figures, too, but I am conscious of the fact that they will be subject to 40% tax when I pop my clogs which may not be too far hence.
Same here. I was very briefly above a million but shy of it now with the recent market falls.
Still, even if you project a modest 4% ("safe" SWR?) rate of return, that is 40K a year tax free. Will take it.
But as you note, the income tax and CGT saved pales into insignificance compared with the potential 40% hit to the entire value. And so do I give thought to at what point in my life I give up the ISA benefits in favour of being in a position to mitigate IHT - something that is dificult to do with an ISA?
Could this have been the government's cunning plan all along?
Of course one possible way of ameliorating IHT on an ISA is to borrow personally, if you can arrange it at an attractive interest rate, give the cash borrowed to your offspring, and live 7 years. OK the interest on the borrowings is not tax deductible but the ISA income isn't taxed so in one's mind one can offset the other. Then when you die the borrowings are a deduction from your estate offsetting to some extent the value of the ISA. Hopefully over those 7 years the ISA will have increased in value. Of course one might not be happy to borrow when aged (I would not), but if you are serious about reducing IHT but keeping the benefit of the ISA.....