If an ISA holder dies, the assets held within the ISA (such as cash or investments) will form part of the individual's estate and can be inherited by a beneficiary(s). The ISA wrapper itself will become a 'continuing ISA' and will then be closed once:
The administration of the estate is completed;
The ISA closes due to all the funds being withdrawn; or
The 3rd anniversary of the date of passing elapses
While the ISA wrapper can't be passed on to a beneficiary, the surviving spouse or civil partner of the deceased ISA holder may be eligible to make an additional contribution to their own ISA.
What is an Additional Permitted Subscription (APS)?
An APS is an additional subscription to an ISA (on top of the annual ISA allowance) which is permitted to the surviving spouse or civil partner of a deceased ISA investor.
Who is eligible for an APS?
From the 6 April 2015 anyone who was married or in a civil partnership with an ISA investor who died on or after 3 December 2014 can apply for an APS providing they were not estranged or separated.
Does an APS affect my ISA allowance for the current tax year?
No, the APS is separate from the ISA allowance which means you can continue to use your current allowance as normal whilst the APS is in addition on top of this.
How much will my APS be?
If the ISA holder passed on or after 6 April 2018, the APS is equal to whichever is higher:
the value of the deceased's ISA at the date of passing; or
the value of the ISA at the point at which it stops being a continuing ISA (i.e the point it is closed)
For example, if you are the surviving spouse of an ISA holder and the value of their ISA was £40,000 on the date of their passing, you would be eligible to make an additional contribution to your own ISA of up to £40,000, on top of the standard annual ISA allowance.
How do I use my APS?
You can use your additional permitted subscription like your normal ISA allowance, and add money to your ISA up to the value of your APS. This might be your own money or money inherited as part of administration of the estate.
It is also possible to use the investments inherited from the deceased investor's ISA to transfer these into your own ISA to use your APS.
How long do I have to use my APS?
If the APS is made by transferring some or all of the investments inherited, it must be completed within 180 days of the administration of the estate to the surviving spouse.
If instead you want to use cash to make your APS, it must be completed within three years after the date of passing, or within 180 days after the administration of the estate is complete.
The APS does not have to be used in one go and you can make several contributions to make use of the APS.
Can I use my APS with another provider
It is possible to transfer your APS to another ISA provider, provided the ISA provider accepts APS transfers. Abundance accepts APS transfers, so if you are eligible for an APS based on an ISA held with another ISA provider, it is possible to transfer the APS to your Abundance IF ISA. If you would like to transfer your APS to Abundance, please get in touch and we can provide you with a form to complete so we can request the transfer from the existing ISA provider.
If you transfer an APS to another ISA provider you will only be able to use your APS by contributing cash. If you plan to use your APS by transferring investments inherited from the deceased ISA holder, you will need to open an ISA yourself with the same provider as the deceased's ISA. For example, if your spouse or civil partner held an ISA with Abundance and you are inheriting the investments, you would need to open an ISA with Abundance if you wanted to transfer the investments to use your APS.
How do I apply for an APS with Abundance?
If you are the surviving spouse or civil partner of an Abundance ISA holder, please get in touch at support@abundanceinvestment.com to apply for an APS. We will ask you for some details about the deceased ISA holder and ask you to complete a declaration which confirms your eligibility to make an APS.