What Happens to Your ISA When Your Partner Dies in 2026/27
When a partner dies in 2026/27, the surviving spouse can inherit their ISA tax-free via the Additional Permitted Subscription. Here is how the APS works.
Quick answer
When your husband, wife or civil partner dies, you do not simply lose the tax shelter on their ISA. You receive an Additional Permitted Subscription (APS) equal to the value of their ISA, on top of your own £20,000 allowance for 2026/27. This lets you keep the same amount of money tax-free, even though the cash or investments legally pass through the estate first.
How the APS works
The Additional Permitted Subscription is a one-off extra ISA allowance triggered by the death of a spouse or civil partner. It equals the higher of the value of the deceased's ISA at the date of death, or its value when the account is eventually closed. So if your partner held £85,000 across their cash and stocks and shares ISAs, you gain an £85,000 APS in addition to your normal £20,000.
Crucially, you do not need to inherit the actual ISA money to use the APS. You could fund the subscription from any cash you have available. This matters when the ISA is left to someone else in the will but the survivor still wants the tax-efficient allowance. The APS is yours by virtue of the marriage or civil partnership, not by inheritance of the assets themselves.
Who can claim, and the deadlines
Only a spouse or civil partner who was living with the deceased at the date of death can claim. Couples separated under a court order, deed of separation, or in circumstances likely to be permanent, do not qualify. Unmarried cohabiting partners get nothing here, no matter how long they lived together. This is one of the clearest financial advantages of marriage or civil partnership for ordinary savers.
The deadlines are strict:
- Cash ISAs: three years from the date of death, or 180 days after the estate's administration completes, whichever is later.
- Stocks and shares ISAs transferred "in specie" (the actual investments moved across): 180 days from the date you inherit them.
Notify the provider early. They will need a death certificate and details of both ISAs. If the deceased held ISAs with several providers, each generates its own APS, and each must be claimed separately.
The "continuing ISA" and tax-free growth
For any death since 6 April 2018, the ISA does not stop being tax-efficient the moment your partner dies. It becomes a continuing ISA (formally, a "continuing account of a deceased investor"). Interest, dividends and capital growth inside it remain free of income tax and capital gains tax until the earliest of three events: the estate administration finishes, the account is closed, or three years pass from the date of death.
After that cut-off, returns become taxable in the normal way. So executors should aim to wind up or transfer the ISA before the three-year point. While the account is in this continuing state, no further contributions can be made into it, but it keeps sheltering whatever is already there.
Inheritance Tax still applies to the estate
The APS protects the income tax and CGT shelter, but it does nothing for Inheritance Tax. The ISA is part of the deceased's estate. For 2026/27, the nil-rate band is £325,000, with a residence nil-rate band of up to £175,000 where a home passes to direct descendants. The estate pays IHT at 40% above the available bands (36% if at least 10% is left to charity).
In practice, married couples and civil partners rarely face IHT on an ISA, because anything passing to a UK-domiciled spouse or civil partner is fully exempt under the spouse exemption. The unused nil-rate band can also transfer to the survivor for later use. Unmarried partners get no spouse exemption, which compounds the fact that they also cannot claim an APS.
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Open Inheritance Tax calculatorPractical steps for the survivor
- Gather the paperwork: death certificate, the deceased's ISA account details, and the date-of-death valuations from each provider.
- Ask each provider in writing to confirm the APS amount and how they want it claimed. Some let you subscribe with new cash; others require an in-specie transfer of the existing assets.
- Decide whether to keep the money where it is or transfer the APS to a better-paying provider. Cash APS allowances can often move; investment APS allowances usually require selling to cash first.
- Use your own £20,000 allowance separately. The APS is in addition to it, so in a single tax year you could shelter £20,000 plus the full inherited value.
- Watch the clock on the three-year (cash) or 180-day (in-specie) windows.
If you are also reorganising your own savings after a bereavement, it is worth checking how much interest outside an ISA would be taxable, given the Personal Savings Allowance of £1,000 for basic-rate and £500 for higher-rate taxpayers (nil for additional-rate).
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ISAs and the Additional Permitted Subscription are UK-wide and set by HMRC, so the £20,000 allowance and the APS rules are identical in England, Scotland, Wales and Northern Ireland. Inheritance Tax is also a UK-wide tax. Devolved differences such as Scottish income tax bands or Welsh land transaction tax have no bearing on inheriting a spouse's ISA. Wherever you live in the UK, the mechanics described here apply in the same way.
Frequently asked questions
What is an Additional Permitted Subscription (APS)?
The APS is an extra ISA allowance given to a surviving spouse or civil partner when their partner dies. It equals the value of the deceased's ISA either at death or when the account is closed, whichever is higher. It sits on top of your own £20,000 annual ISA allowance for 2026/27, so you can shelter the inherited money from tax even though you did not technically own it before.
Do I have to be married to claim the APS?
Yes. The Additional Permitted Subscription is only available to a legal spouse or civil partner who was living with the deceased at the date of death (not separated under a court order or in circumstances likely to be permanent). Unmarried cohabiting partners, children, siblings and friends cannot claim an APS, even if they inherit the actual ISA money. This is a key gap for unmarried couples to plan around.
How long do I have to use the APS allowance?
For cash, you generally have three years from the date of death, or 180 days after the estate's administration is complete if that is later. For investments held in a stocks and shares ISA being transferred 'in specie' (as the actual assets), the window is 180 days from when you inherit them. Missing these deadlines means losing the extra allowance permanently, so notify the ISA provider early.
Is the inherited ISA free of Inheritance Tax?
No. The APS only preserves the income-tax and capital-gains-tax shelter. The ISA itself still counts as part of the deceased's estate for Inheritance Tax. However, anything passing to a UK-domiciled spouse or civil partner is exempt from IHT under the spouse exemption, so in practice there is usually no IHT between married couples. The nil-rate band of £325,000 also applies.
Does the ISA keep growing tax-free after death?
For deaths since April 2018, an ISA becomes a 'continuing ISA' (also called a continuing account of a deceased investor). Income and growth stay tax-free until the earliest of: the estate administration completing, the ISA closing, or three years after death. After that point any returns become taxable, so the executor should aim to close or transfer the account before the three-year mark.
Can I use the APS with a different ISA provider?
Often yes. If the deceased's ISA was in cash, you can usually transfer the APS allowance to a different provider and subscribe there. For stocks and shares ISAs, transferring the allowance elsewhere normally requires the assets to be sold to cash first, then resubscribed. Rules vary between providers, so confirm before assuming you can move it. Not every provider accepts inbound APS subscriptions.
Is the APS different anywhere in the UK?
No. ISAs and the Additional Permitted Subscription are governed by UK-wide rules set by HMRC, so the £20,000 allowance and APS mechanics are identical in England, Scotland, Wales and Northern Ireland. Inheritance Tax is also UK-wide. Only taxes such as income tax bands and stamp duty differ by nation, and those do not affect how you inherit an ISA from a spouse.
What happens to a Lifetime ISA or Junior ISA on death?
A Lifetime ISA forms part of the estate and can generate an APS for a spouse, but the 25% government bonus is not paid on the APS itself. The £4,000 LISA limit does not cap the APS. A Junior ISA belongs to a child; if the child dies it passes under intestacy or a will, while the £9,000 JISA limit is irrelevant to the APS, which only applies to adult ISAs.
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