Article

What happens to your ISA when you die?

If an ISA holder dies, a surviving spouse or civil partner can inherit the tax benefits of their ISA through an 'additional permitted subscription'.

| 6 min read

If an ISA holder dies, the assets are left to the beneficiaries of their estate – according to the specifications of their will or, if there isn’t one, according to the rules of intestacy. No matter how the assets are divided, in most cases a surviving spouse or civil partner can inherit the tax benefits of the ISA through an 'additional permitted subscription'.

If there is no surviving spouse and the assets are left to another beneficiary such as a son or daughter, the ISA ‘wrapper’ cannot be passed on.

What is an Additional Permitted Subscription?

Introduced in April 2015, additional permitted subscriptions allow a surviving spouse or civil partner to ‘inherit’ the tax benefits of their deceased partner’s ISA. They are one-off ISA allowances available to the surviving spouse or civil partner that can be made in addition to their annual ISA allowance.

The additional permitted subscription is equal to the total value of the deceased’s ISA accounts Additional permitted subscriptions can be made to a new or existing Cash ISA, Stocks and Shares ISA, Innovative Finance ISA or Lifetime ISA (if eligible, £4,000 per annum limit applies to Lifetime ISAs) – or a combination.

Who is eligible for an additional permitted subscription?

Anyone whose spouse or civil partner died on or after 3 December 2014, provided the couple were living together at the date of death.

How does the process of using an additional permitted subscription start?

The surviving spouse should contact the ISA provider(s) who, following receipt of an original or certified copy of the death certificate, will confirm the value of any additional permitted subscription. It will then be possible to use an additional permitted subscription with this, or another, ISA provider.

What if the spouse or civil partner had ISAs with several providers?

The surviving spouse or civil partner will qualify for an additional permitted subscription with each provider with which their spouse/partner held an ISA. Each additional permitted subscription can either be used with the existing provider or transferred to another provider. Once part of the additional permitted subscription has been used with the existing provider, the remainder cannot be used with a different provider.

Can a deceased spouse’s/civil partner’s ISA assets be transferred directly into the new ISA?

Yes, for assets transferred to an ISA with the same ISA provider. The value of assets at the time the transfer is made counts towards the APS allowance limit. The option of a subscription of shares and funds is not available if the surviving spouse or civil partner makes an additional permitted subscription to an ISA manager other than the one who held the deceased’s ISA, it must be made in cash.

Payments in cash can be made to any type of ISA in the usual way, including by cheque or bank transfer, and do not have to be made using the money from the inherited ISA.

What happens to the ISA during the administration of the estate?

The ISA becomes a ‘continuing account of a deceased investor’, or a ‘continuing account’ for short, for up to three years. No money can be paid into it from this point, but it will continue to benefit from the tax advantages of an ISA, so any growth, income or interest will remain tax-free.

Active management of the investments already held within the account may continue. However, it is not possible to request the transfer to an alternative ISA manager; nor is it possible to change a Stocks & Shares ISA into a Cash ISA or vice versa with the same ISA manager.

How is the APS allowance calculated if the assets in the ISA have risen/fallen in value?

If the death occurred on or after 6 April 2018 the APS will normally be the value of cash and/or investments at the time they are passed on, or the value of the ISA on the date of death – whichever higher.

If the value of the assets decreases, they can all be transferred, and a cash subscription made to ‘top up’ the APS to the value at the date of death.

Is there a time limit to use an additional permitted subscription?

For cash subscriptions, the additional permitted subscription is available for three years after the date of death, or for up to 180 days after the administration and distribution of estate assets is complete – whichever is the later. Transfers of stock must be made within 180 days of ownership of the ISA’s passing to the surviving spouse or civil partner.

How to use an additional permitted subscription with Charles Stanley Direct

To apply for an additional permitted subscription ISA with Charles Stanley Direct please contact our Helpdesk on 0131 550 1234 for the forms.

What happens when there is no APS / eligible spouse?

ISA investments still retain their tax-exempt status in respect of income and capital gains for a limited period following the death of the account holder and during the administration of the deceased's estate.

The exemption lasts for a maximum of three years after the account holder's death and applies only to investments retained in the ISA. As explained above, whilst the exemption has effect, the account is designated a 'continuing account’.

For Capital Gains Tax (CGT) purposes, the assets are treated as having been acquired by the beneficiary at the market value at the date of transfer. If the transfer occurs after the exemption ceases to have effect, the beneficiary is treated as having acquired the investment at the date of transfer but at its market value at the time the account ceased to be a continuing account. So, the relevant value for CGT purposes is at the date of transfer or the 3-year anniversary, whichever comes first.


Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

What happens to your ISA when you die?

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The information in this article is based on our understanding of UK Legislation, Taxation and HMRC guidance, all of which are subject to change. The tax treatment of pensions depends on individual circumstances and is subject to change in future. This article is solely for information purposes and does not constitute advice or a personal recommendation.

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