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Don’t let your ISA die with you – remember your APS allowance.

In the 2015 budget, the Government introduced something called an ‘Additional Permitted Subscription’ (or ‘APS’) allowance.

Louis Coke


As described by HMRC here,  ‘Additional Permitted Subscription’ (or ‘APS’) allows the partner of a deceased person to transfer the value of their deceased spouse’s ISA to their own name, without incurring any tax charge (save for inheritance tax).

Recently, insurance company Zurich obtained figures from HM Revenue & Customs that showed 21,000 people used the APS allowance in the last tax year. However, according to estimates from the Tax Incentivised Savings Association around 150,000 married ISA investors pass away each year, therefore this seems a significantly underused tax break.

In practical terms, if a married person died on 10th April 2018 and had an ISA valued at £100,000 at the date of their death, their spouse would be allowed to contribute £120,000 to their ISA for the 2018-19 tax year. This £120,000 is made up of the £100,000 value of their late spouse’s ISA and the £20,000 ISA allowance that each UK resident has for the 2018-19 tax year.

Bereavement is obviously a very difficult time for surviving spouses and families. Families can also be somewhat surprised at the level of inheritance tax due after death, therefore any tax breaks are often greatly appreciated.

Whilst there is nothing that can be done to protect the £100,000 ISA from Inheritance tax in our example, we can take advantage of the tax treatment of ISAs for income and capital gains tax for the years ahead for the surviving spouse.

The APS system can seem rather complicated, however for those with ISAs at Charles Stanley we have simplified the process as far as possible. Please speak to your investment manager for further information.

Source: HMRC (Freedom of Information request by Zurich)

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