Inheritance tax: The key differences to note with ISAs versus pensions | Personal Finance | Finance

When someone dies, their ISA becomes part of your estate for inheritance tax purposes. Money within the ISA can be left in their will for anyone they wish to give it to.

However, a spouse or civil partner can also inherit their ISA allowance as a one-off boost to their own allowance.

This means that the deceased’s spouse or civil partner can inherit the money in the ISA and its tax-free status too.

In comparison, SIPPs are not part of the deceased’s estate as their cash is held within a discretionary trust. As a result, the money in the pension can be passed on to loved ones without being subject to IHT.