When someone close to you passes away, there’s a lot to think about, and financial decisions may feel especially difficult to navigate. One common area of uncertainty is what happens to an Individual Savings Account (ISA). Many people assume these accounts lose their tax-free benefits immediately, but that isn’t always the case.
If you’re a spouse or civil partner, you may be able to keep those benefits through something called the Additional Permitted Subscription (APS). In this article, we explain how the APS works, who qualifies, and what steps to take. You’ll also find answers to common questions, all designed to help you feel more informed and supported at a time when clarity matters most.
What you need to know about ISAs and the APS at a glance:
- ISAs continue to benefit from income tax and capital gains tax exemptions for a limited time after death.
- Spouses and civil partners may be eligible for the Additional Permitted Subscription (APS).
- An APS allows you to invest an equivalent value to the deceased’s ISA without losing tax benefits.
- Clear deadlines apply for claiming an APS and missing them may mean losing the allowance.
- APS can be used across different types of ISAs and providers, depending on your circumstances.
What happens to an ISA when someone dies?
When an ISA holder passes away, their ISA becomes a “continuing ISA” and continues to benefit from income tax and capital gains tax exemptions for a limited time. This status lasts until the account is closed or after three years, whichever happens first. During this period, any interest or returns remain tax-free, though new contributions cannot be made.
Understanding the Additional Permitted Subscription (APS)
The APS allowance enables a surviving spouse or civil partner to inherit their partner’s ISA allowance, preserving its tax-free advantages. It allows them to make an extra tax-efficient contribution to their own ISA (on top of their annual allowance) based on the value of the deceased’s ISA holdings.
This can be a meaningful benefit, particularly when the original ISA held significant value. It’s also important to note that the APS can apply, regardless of who inherits the ISA funds. Even if the money is left to someone else, such as children, the surviving partner still retains the right to use the APS allowance.
While ISAs themselves are free from income and capital gains tax, the value of the ISA, and therefore the APS, still forms part of the deceased’s estate for Inheritance Tax (IHT) purposes. If the estate exceeds the available nil-rate band, IHT may still apply.
Who is eligible for an APS?
The APS is exclusively available to spouses and civil partners. Other beneficiaries, such as children or unmarried partners do not qualify.
To claim an APS, you must:
- Have been married or in a civil partnership with the ISA holder at the time of their death.
- Complete your claim within the timelines specified by HMRC.
Further details about eligibility can be found here.
How to claim an APS
Claiming an APS is straightforward when broken down into clear steps. Here is an overview of the process to help guide your actions.
- Notify the ISA provider
Inform the ISA provider of the account holder’s death. They will guide you through their specific process.
- Confirm your APS allowance
The ISA provider will confirm your APS allowance amount. Keep this information safe, as you’ll need it to complete your subscription.
- Consider where to hold your APS allowance
Think about how best to invest the APS allowance based on your overall financial goals. You might want to consolidate with your existing ISA or explore other options that align with your investment strategy and risk profile. Your financial adviser can help assess what works best for your circumstances.
- Complete your subscription
Ensure you finalise your APS subscription within three years of your partner’s passing or within 180 days following the administration of their estate, whichever is later. Missing these deadlines can result in losing your entitlement to the APS allowance. You can read a clear explanation of the APS time limits here.
Frequently asked questions about the APS
Can APS allowances be transferred between providers?
Yes, APS allowances can be transferred between ISA providers. For example, from the deceased’s provider to your own. Each provider may have different processes and requirements, so it’s important to check the details with both parties before starting a transfer.
It’s also worth noting that APS allowances are issued per provider, not per ISA. If your partner held multiple ISAs with the same provider, you only need one APS allowance to cover them. But if they held ISAs across different providers, a separate APS allowance must be arranged with each one.
Is the APS available for all types of ISAs?
An APS applies to Cash ISAs, Stocks and Shares ISAs, Innovative Finance ISAs, and Lifetime ISAs. Specific rules may vary, so seeking professional advice can provide additional clarity.
What if the surviving spouse already has an ISA?
The APS allowance is separate from your annual ISA allowance (£20,000 for 2025/26), enabling you to maximise both allowances fully.
Protect your ISA benefits
We understand that navigating ISA inheritance can feel complex, especially when you’re managing both financial and emotional decisions.
If you’re thinking about how your ISA fits into your wider financial plan, we’re here to help. Our team offers ongoing support to build a personalised strategy that considers your goals, tax position and legacy plans, including how allowances like APS may be used as part of that bigger picture. Get in touch to start a conversation with one of our advisers.
Please note:
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
The value of your investments (and any income from them) can go down as well as up, and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term (minimum of 5 years) and should fit in with your overall risk profile and financial circumstances.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
The Financial Conduct Authority does not regulate estate planning, tax planning, trusts, or Will writing.