When an ISA holder dies, their tax-free savings don't simply lose their special status the moment they pass to a spouse or civil partner. A specific mechanism called the Additional Permitted Subscription (APS) allows a surviving spouse or civil partner to inherit an amount equivalent to the value of the deceased's ISA, on top of their own annual allowance, keeping that money sheltered from tax. Understanding how this works can matter enormously to the financial position of a surviving partner.
What happens to an ISA when the holder dies
An ISA is a personal, individual account — it cannot be jointly held, and it cannot simply pass by default into someone else's ISA. When the account holder dies, the ISA itself doesn't immediately lose its tax-efficient status; income and gains within it generally remain tax-free until the earlier of the administration of the estate being completed, the account being closed, or (in current rules) three years passing since the date of death — though this "continuing ISA" treatment and the exact rules are worth confirming directly with HMRC guidance, as the details can be technical.
Eventually, though, the ISA's underlying investments and cash pass to whoever inherits them under the deceased's will or the rules of intestacy — but crucially, simply inheriting the money as an asset does not, by itself, let the recipient hold it inside their own ISA wrapper. That's where the Additional Permitted Subscription comes in.
What the Additional Permitted Subscription actually does
The APS is a special, one-off additional ISA allowance available only to a surviving spouse or civil partner (not other relatives, and not unmarried partners) of the deceased ISA holder. It allows the survivor to contribute an amount up to the value of the deceased's ISA into their own ISA, without this counting against their normal £20,000 annual allowance for that year.
Two ways the APS can work
- Using the deceased's actual ISA assets: the surviving spouse inherits the specific investments or cash from the ISA and can transfer them "in specie" into their own ISA, up to the value of the APS allowance, without needing to sell and rebuy.
- Using the APS allowance with other money: alternatively, the survivor can use cash of their own (not necessarily the actual inherited money) up to the value of the APS allowance, and pay that into their ISA using the special allowance — this is useful when the ISA's actual assets have already been distributed as part of the estate to someone else, or when in-specie transfer isn't practical.
How the allowance is calculated
The APS allowance is generally based on either the value of the ISA at the date of death, or the value at the point it's finally closed and the assets distributed, depending on which the surviving spouse and the ISA provider agree to use, and depending on specific provider rules. This is worth clarifying directly with the deceased's ISA provider, since a stock market ISA could have risen or fallen in value between the date of death and the eventual closure of the account, and the choice of valuation date can matter.
A worked example
Suppose an ISA holder dies with £120,000 in their Stocks & Shares ISA. Their surviving spouse is entitled to an Additional Permitted Subscription of £120,000 (based on the value at death, in this hypothetical example), separate from and in addition to their own normal £20,000 annual ISA allowance.
If the surviving spouse's own ISA is with the same provider, they may be able to arrange for the actual investments to be transferred in specie into their existing ISA. If their ISA is with a different provider, or the deceased's account is being closed and its assets distributed differently, the surviving spouse can instead use their own funds — for example, cash received from elsewhere in the estate — up to the £120,000 APS limit, paid into their ISA as a cash subscription using the allowance, separate from their normal yearly £20,000.
In this hypothetical scenario, the surviving spouse could therefore shelter £120,000 (via the APS) plus their normal £20,000 annual allowance in the same tax year — a total of £140,000 of tax-free ISA subscription capacity, which would be impossible without the APS mechanism.
APS with more than one ISA
If the deceased held multiple ISAs across different providers — for example, a Cash ISA with one bank and a Stocks & Shares ISA with another — an APS allowance generally arises separately in respect of each ISA, and each must generally be claimed with the relevant provider individually. A surviving spouse does not have to consolidate everything with a single provider, though doing so can simplify administration.
Using the APS with a different provider from the deceased's
A surviving spouse is not required to claim the APS with the same provider that held the deceased's ISA. They can instead ask their own ISA provider to accept an APS claim, which the receiving provider then verifies with the deceased's provider — a process that can take longer than staying with the original provider, but which allows the survivor to consolidate inherited allowance with an existing account of their choosing.
Practical steps for a surviving spouse
- Notify the deceased's ISA provider of the death and ask specifically about their process for the Additional Permitted Subscription — different providers can have different forms and procedures.
- Decide, in consultation with the provider (and often a solicitor administering the estate), whether an in-specie transfer of the actual ISA assets or a cash-based use of the allowance is more appropriate.
- Be aware of any time limits the specific provider or HMRC rules impose on claiming and using the APS allowance — this is not necessarily indefinite.
- Keep clear records of the APS amount claimed, separate from the normal annual ISA allowance, since providers and HMRC will want this properly documented.
Who is eligible — and who isn't
| Relationship to the deceased | Eligible for APS? |
|---|---|
| Legally married spouse | Yes |
| Registered civil partner | Yes |
| Unmarried partner (however long the relationship) | No |
| Children or other relatives | No (they may still inherit the underlying money as an asset, just not with APS treatment) |
This distinction is important and sometimes surprising: even a long-term unmarried partner who inherits the ISA's assets under a will does not receive the APS allowance — only a legal spouse or civil partner qualifies, regardless of how the estate is otherwise structured.
Why this matters for financial planning
For couples where one partner holds significantly more in ISAs than the other, understanding the APS can be relevant to broader estate and financial planning — it means a surviving spouse won't necessarily be forced to either lose the tax-free wrapper on inherited ISA money or slowly drip-feed it back into an ISA over several years using only their normal annual allowance.
Common mistakes to avoid
Missing the claim window
Providers and HMRC guidance impose time limits on claiming and using an APS allowance, and a grieving surviving spouse dealing with estate administration can understandably let this slip. Contacting the relevant provider early — even before the full estate is settled — to at least register the intention to claim can help avoid missing a deadline.
Assuming the APS is automatic
Unlike some estate processes, the APS is not applied automatically — it must be actively claimed by the surviving spouse or civil partner, using the specific provider's process. A survivor who assumes it will simply happen in the background risks losing the additional allowance entirely.
Conflating APS with simply inheriting the money
Inheriting the cash or investments that were in a deceased's ISA, as an asset under the will, happens regardless of the APS. The APS is a separate, additional allowance that lets that inherited value (or an equivalent sum) go into the survivor's own ISA tax-free — without claiming it, the inherited money can still be received, just not sheltered within an ISA beyond the survivor's normal annual allowance.
Frequently asked questions
Does the APS reduce the surviving spouse's normal annual ISA allowance?
No. The APS is entirely separate from and additional to the survivor's own £20,000 annual allowance for the tax year, meaning both can potentially be used in full in the same tax year.
What if the surviving spouse remarries or the marriage had already ended before death?
APS eligibility is based on being the spouse or civil partner at the date of death, so a divorced former spouse would not qualify. Remarriage after the original spouse's death does not affect an already-established entitlement to claim the APS from the first spouse's estate.
Can the APS allowance be split across multiple ISAs of the survivor's own?
This generally depends on the specific ISA and provider rules in question, in a broadly similar way to how normal annual ISA contributions can, since April 2024, be spread across multiple providers of the same ISA type. It is worth confirming directly with the receiving provider, or providers, exactly how they administer a split APS claim, since practice can vary.
Key takeaways
- A surviving spouse or civil partner can claim an Additional Permitted Subscription (APS) equal to the value of the deceased's ISA, on top of their own normal annual allowance.
- The APS is only available to legal spouses and civil partners — not unmarried partners, children, or other relatives.
- The APS can be used either by transferring the deceased's actual ISA investments in specie, or by subscribing an equivalent amount of the survivor's own cash.
- An ISA generally retains tax-free treatment for a period after death, but eventually the assets pass to beneficiaries under the will or intestacy rules.
- Valuation date, provider-specific processes, and time limits all vary, so contacting the deceased's ISA provider directly and promptly is important.
- Always check current HMRC guidance, as the precise rules and time limits around ISA inheritance can be updated.