What is the Inherited ISA Additional Permitted Subscription (APS) allowance?

Full answer

The Additional Permitted Subscription (APS) was introduced from 6 April 2015 to ensure that the tax advantages of an ISA are not lost on the death of the ISA holder. Without the APS, a surviving spouse could only contribute up to their own annual ISA allowance (GBP 20,000 in 2026/27). How the APS works When an ISA holder dies, their spouse or civil partner is entitled to an APS equal to the higher of: -- The value of the deceased's ISA at the date of death, or -- The value of the ISA assets at the date they are distributed or the ISA is closed (if later) For example: deceased has GBP 150,000 in an ISA at death. Surviving spouse can make an additional GBP 150,000 subscription to their own ISA, over and above their normal GBP 20,000 annual allowance. Their total ISA subscription capacity in that period = GBP 170,000. Deadlines -- The APS must be used within 3 years of the date of death, or -- 180 days after the administration of the deceased's estate is completed -- whichever is later Conditions -- The deceased and the surviving partner must have been married or civil partners and living together at the time of death (not separated) -- The deceased must have held a UK ISA -- The APS can be used at the same ISA provider or a different provider -- The surviving spouse does not need to inherit the actual ISA assets -- the APS is an entitlement based on the value, not the assets themselves Types of ISA The APS can be used for a Cash ISA, Stocks and Shares ISA, or Innovative Finance ISA (subject to provider availability). Lifetime ISA and Junior ISA do not qualify. Multiple ISAs at death If the deceased had multiple ISAs, the APS is calculated as the total of all ISA values, and the surviving spouse gets one combined APS entitlement. Each ISA provider issues an APS allowance certificate. Continuation account Alternatively, a surviving spouse can apply to the ISA provider for a "Continuing Account" -- this keeps the deceased's ISA active, with the ISA wrapper maintained, until the estate is administered (up to 3 years). The investments inside remain ISA-sheltered during this period even though no new subscriptions can be made to it.