How the ISA Additional Permitted Subscription (APS) Works After a Death

When someone who holds an Individual Savings Account (ISA) dies, their surviving spouse or civil partner may be entitled to an additional ISA allowance known as the Additional Permitted Subscription, or APS. This allowance exists on top of the standard annual ISA subscription limit and is broadly equal to the value of the deceased person's ISA holdings at the relevant date. APS does not transfer the ISA itself — the ISA assets pass through the estate in the normal way, according to the deceased's will or the rules of intestacy. What APS provides is a separate, additional tax-advantaged allowance that the surviving spouse or civil partner can use to make their own ISA subscriptions.

APS was introduced for deaths occurring on or after 3 December 2014. For deaths on or after 6 April 2018, a further change means that the deceased's ISA can retain its tax-advantaged status for a limited period after death, and the APS allowance may be calculated on a more favourable basis. The governing legislation is Regulation 5D of the Individual Savings Account Regulations 1998 (SI 1998/1870), as inserted by SI 2015/869 and subsequently amended.

This article explains how APS works, who qualifies, how the allowance is calculated, and the key time limits involved. It does not constitute financial advice.

If your spouse or civil partner has died and they held one or more ISAs, you may be entitled to an additional ISA allowance — the APS — on top of your own annual ISA allowance. The APS allowance is broadly equal to the value of the deceased's ISA holdings. You do not need to have inherited the ISA assets themselves to use this allowance; it is a separate tax entitlement that you can fund with your own money if you choose.

The key facts are as follows. APS applies to deaths on or after 3 December 2014. You must have been living together as spouses or civil partners at the date of death to qualify. For deaths on or after 6 April 2018, the allowance is the higher of the value at the date of death or the value when the ISA ceases to be a "continuing account." There are strict time limits: cash subscriptions must generally be made within three years of death (or 180 days after estate administration is complete, if later), and in-specie transfers of non-cash assets must be made within 180 days of receiving those assets from the estate.

APS operates as an additional ISA subscription allowance. It sits alongside, and is entirely separate from, the standard annual ISA subscription limit. When a person who holds an ISA dies, the ISA itself does not pass directly to any named beneficiary — instead, the assets within the ISA form part of the deceased's estate and are distributed according to the will or intestacy rules. The ISA tax wrapper, which sheltered income and gains from tax during the holder's lifetime, historically ended at the point of death.

For deaths on or after 6 April 2018, legislation introduced the concept of a "continuing account of a deceased investor" — commonly referred to as a continuing ISA. Under Regulation 2G of the ISA Regulations 1998 and section 694A of the Income Tax (Trading and Other Income) Act 2005, the ISA retains its tax-advantaged status during the administration of the estate, up to a maximum of three years after death. No new subscriptions can be made into a continuing ISA, but the existing investments within it may continue to be managed, subject to the ISA manager's normal terms. Once the continuing period ends — whether because estate administration is complete, the account is closed, or three years have passed, whichever comes first — the ISA wrapper is removed. From that point, any income or gains become taxable.

The APS allowance gives the surviving spouse or civil partner the right to subscribe additional funds into their own ISA, up to a value that reflects the deceased's ISA holdings. This can be done as a cash subscription (using the survivor's own money or inherited funds) or, in certain circumstances, as an in-specie transfer of the actual investments held in the deceased's ISA. Both routes are subject to their own rules and time limits.

How the allowance is calculated

The method of calculating the APS allowance depends on when the death occurred.

For deaths between 3 December 2014 and 5 April 2018, the APS allowance is fixed at the value of the deceased's ISA holdings at the date of death. Because the continuing ISA rules did not exist for this period, the ISA wrapper ended at death, and any income or gains arising during estate administration were taxable.

For deaths on or after 6 April 2018, the APS allowance is the higher of the value at the date of death or the value at the point when the ISA ceases to be a continuing account. This means that if the investments within the ISA grew in value during the administration period, the survivor benefits from the higher figure. However, if the survivor has already used the date-of-death value to make any APS subscription — even a partial one — before the continuing ISA closes, they cannot later claim the higher closure value. This is a valuation election: once any APS subscription is made using the date-of-death value, the right to the potentially higher closure value is permanently lost.

Multiple ISAs and multiple managers

If the deceased held ISAs with more than one ISA manager, the survivor has a separate APS allowance with each manager. Multiple ISAs held with the same manager are combined into a single APS allowance for that manager. For deaths on or after 6 April 2018, the survivor can independently choose whether to use the date-of-death value or the closure value with each manager, provided no APS subscription has already been made with that manager — it does not have to be the same election across all managers.

If the deceased held a combination of ISA types — such as Cash ISA, Stocks and Shares ISA, Innovative Finance ISA, or Lifetime ISA — with the same manager, the APS allowance with that manager is the combined total value of all those ISA types. The survivor may then subscribe their APS funds into any ISA type they choose, subject to the normal eligibility rules that apply to each type.

Eligibility

APS is available to a surviving spouse or civil partner who was living together with the deceased at the date of death. The definition of "living together" follows the meaning given by section 1011 of the Income Tax Act 2007, which provides that married couples or civil partners are treated as living together unless they are separated under a court order, by a deed of separation, or in circumstances where the separation is likely to be permanent. Temporary separations — for example due to work, illness, or care arrangements — do not of themselves break the "living together" condition.

APS is not available to unmarried partners, regardless of the length of the relationship or any cohabitation arrangement.

Time limits

Cash APS subscriptions must be made within a "permitted period," which is three years from the date of death, or if estate administration completes later, 180 days from that completion date. A special transitional rule applies to deaths between 3 December 2014 and 5 April 2015: for time limit purposes, the deceased is treated as having died on 6 April 2015, so the three-year period runs from that date.

In-specie transfers — where the actual investments from the deceased's ISA are transferred into the survivor's ISA rather than being sold and reinvested as cash — must be completed within 180 days of the distribution of the relevant assets to the surviving spouse or civil partner by the estate. Each interim distribution of assets carries its own 180-day window. For deaths between 3 December 2014 and 5 April 2015, the distribution is treated as occurring on 6 April 2015 or the actual date, whichever is later.

Continuing ISA period

For deaths on or after 6 April 2018, the continuing ISA status lasts until the earliest of: completion of the administration of the estate, closure of the ISA account, or three years after the date of death. On the day after the third anniversary, if the account remains open, the ISA wrapper is removed and subsequent income and gains become taxable.

Manager obligations

HMRC guidance indicates that ISA managers should normally provide a valuation for APS purposes to the survivor's chosen manager within 30 calendar days of receiving a request. This 30-day period may be suspended if the death certificate has not been received. It should be noted that this timeframe appears in HMRC's administrative guidance for ISA managers and may not represent a strict statutory deadline.

APS vs. Inheritance

One of the most frequent areas of misunderstanding is the relationship between APS and inheritance. APS is not a mechanism for transferring ISA assets to a surviving spouse or civil partner. The ISA assets themselves are distributed through the estate in the usual way. APS is a separate tax allowance that entitles the survivor to make additional ISA subscriptions. The survivor can use their own money to fund these subscriptions — they do not need to have actually inherited the deceased's ISA assets to use the APS allowance.

APS vs. Annual Allowance

Another common point of confusion relates to the standard annual ISA subscription limit. APS is entirely additional to the standard annual allowance. Using APS does not reduce or affect the survivor's normal ISA subscription entitlement for the tax year. The standard annual ISA subscription limit is set by the Chancellor in each Budget and is subject to change from year to year.

Date-of-Death vs. Closure Value

The distinction between the date-of-death value and the closure value for deaths on or after 6 April 2018 also causes confusion. These are not cumulative. The APS allowance with each manager is the higher of the two values, and the survivor must effectively choose one basis or the other. If any APS subscription — even a partial one — is made using the date-of-death value before the continuing ISA has closed, the right to claim the potentially higher closure value with that manager is permanently lost.

Choosing an ISA Manager

Finally, the rules around choosing an ISA manager for APS subscriptions are often misunderstood. Once the survivor has made an APS subscription with a particular ISA manager, all further APS subscriptions must be made with the same manager. The unused balance of the APS allowance cannot be split across different managers. However, after subscribing, the survivor can transfer the resulting ISA (including the APS-funded portion) to a different manager through a normal ISA transfer.

APS is available even without inheriting the ISA assets

The survivor's entitlement to APS exists independently of whether they actually receive the deceased's ISA assets under the will or intestacy rules. The survivor can fund APS subscriptions from any source of their own money.

In-specie transfers are restricted to the original ISA manager

If the survivor wishes to transfer the actual investments (rather than cash) from the deceased's ISA into their own ISA using APS, this can only be done with the ISA manager who held the deceased's account. To use a different manager, the survivor must use cash subscriptions rather than in-specie transfers.

Non-UK residents may use APS

Although non-UK residents are generally unable to subscribe to ISAs, the APS regulations permit non-UK resident surviving spouses or civil partners to make APS subscriptions. In practice, however, individual ISA managers may choose to restrict their services to UK residents, so availability may vary between providers. HMRC reporting requirements, such as residence declarations, still apply.

Junior ISAs are excluded

APS cannot be made to or from a Junior ISA. This exclusion applies in all circumstances.

Lifetime ISA APS subscriptions

APS subscriptions can be made to a Lifetime ISA, but such subscriptions count towards the Lifetime ISA annual payment limit, which in most cases is set at a lower figure than the overall annual ISA subscription limit. APS subscriptions to a Lifetime ISA do not count towards the standard overall annual ISA subscription limit. Normal Lifetime ISA eligibility rules, including any applicable age requirements, still apply. Normal Lifetime ISA withdrawal charges still apply if funds are later withdrawn other than for a qualifying purpose.

The valuation election

For deaths on or after 6 April 2018, if the survivor makes any APS subscription — even a partial one — based on the date-of-death value before the ISA ceases to be a continuing account, they forfeit the right to later claim the potentially higher closure value with that manager. This decision is irrevocable and applies on a per-manager basis.

ISA managers are not obliged to accept APS subscriptions

Published guidance indicates that ISA managers are not required to offer APS facilities. The survivor may need to check whether their chosen provider accepts APS subscriptions before proceeding.

For a surviving spouse or civil partner, the practical effect of APS is that they receive a one-off additional ISA allowance, broadly matching the value of the deceased's ISA holdings, which they can use to shelter additional funds within an ISA tax wrapper. This allowance exists on top of the survivor's own annual ISA entitlement and can be used over a period of up to three years (or slightly longer in some cases, depending on the pace of estate administration).

The process typically involves the ISA manager who held the deceased's account providing a valuation of the holdings. The survivor then decides whether to subscribe using cash (from any source) or by transferring the actual investments in specie, subject to the constraints described above. If the death occurred on or after 6 April 2018, the survivor may also have the option to wait until the continuing ISA period ends to see whether the closure value exceeds the date-of-death value, potentially resulting in a larger APS allowance — though using any portion of the date-of-death allowance before that point removes this option with that manager.

Because APS subscriptions must ultimately all be made with a single ISA manager (per deceased ISA manager), and because in-specie transfers are only available with the manager who originally held the deceased's ISA, the choice of manager and subscription method involves several interdependent considerations.

Where the deceased held ISAs with multiple managers, the survivor's position is managed separately with each one. The survivor can use different valuation bases (date-of-death or closure value) with different managers, and each manager's APS allowance is independent.

Does APS apply if the death occurred before 3 December 2014?

No. APS was introduced for deaths occurring on or after 3 December 2014 only. Deaths before this date do not give rise to an APS entitlement.

Do I need to inherit the ISA to use APS?

No. The APS allowance is independent of whether the surviving spouse or civil partner actually inherits the deceased's ISA assets. The survivor can fund APS subscriptions with their own money.

Does APS reduce my normal annual ISA allowance?

No. APS is an additional allowance on top of the standard annual ISA subscription limit. The two allowances are entirely separate.

Can I split my APS allowance between different ISA managers?

No. Once an APS subscription has been made with a particular ISA manager, all further APS subscriptions (relating to the same deceased manager's holdings) must be made with that same manager. The unused balance cannot be moved to a different provider. However, after subscribing, the resulting ISA can be transferred to another manager through a normal ISA transfer.

Can I use APS if I live outside the UK?

The regulations permit non-UK resident surviving spouses or civil partners to use APS. However, individual ISA managers may restrict their services to UK residents, so this may not be available with every provider.

What is a "continuing ISA"?

For deaths on or after 6 April 2018, a deceased person's ISA becomes a "continuing account of a deceased investor," which retains its tax-advantaged status during estate administration, for up to three years after death. No new subscriptions can be made into a continuing ISA, but existing investments within it may continue to be managed, subject to the ISA manager's normal terms. The continuing ISA status ends on the earliest of: completion of estate administration, closure of the account, or three years after the date of death.

What happens if the ISA value goes up after death?

For deaths on or after 6 April 2018, the APS allowance is the higher of the value at the date of death or the value when the ISA ceases to be a continuing account. However, if the survivor has already made any APS subscription — even a partial one — using the date-of-death value before the continuing ISA closes, they cannot later claim the higher closure value with that manager.

Can APS be used with a Junior ISA?

No. APS cannot be made to or from a Junior ISA in any circumstances.

Is there a time limit?

Yes. Cash APS subscriptions must be made within three years of death, or if estate administration completes later, 180 days from that completion date. In-specie transfers must be completed within 180 days of the distribution of the relevant assets from the estate. Transitional rules apply to deaths between 3 December 2014 and 5 April 2015.

Can I make an in-specie transfer to a different ISA manager?

No. In-specie transfers using APS can only be made with the ISA manager who held the deceased's ISA. To use a different manager, the subscription must be made in cash.

• Additional allowance: APS is separate from standard ISA limits.
• Asset independence: You don't need to inherit the ISA to get the allowance.
• Eligibility: Must be spouse/civil partner, living together at death.
• Continuing ISA: Tax wrapper remains for up to 3 years (deaths on/after 6 Apr 2018).
• Valuation choice: Can use higher of date-of-death or closure value (if no prior sub).
• Time limits: 3 years generally for cash; 180 days for in-specie.

Related: Claiming Back Tax After a Spouse Dies | ISA Allowance Rules | FSCS Protection Across Multiple Banks.