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Legal News | 9.03.23

Additional Permitted Subscriptions – the little-known ISA allowance.

As many people already know, an Individual Savings Account (“ISA”) is a great way to save your money in a tax-free savings account.  But what happens to your ISA when you die?

Well, the bad news is that the total value of your ISA is still considered part of your estate for inheritance tax purposes.  The value of your ISA will be added together with your other assets to calculate the gross value of your estate.  Depending on a number of factors, such as the size of your net estate and the terms of your will or the rules of intestacy, there may or may not be inheritance tax to pay.

However, onto the good news. Following a change in 2014, it is now possible for your spouse or civil partner to continue to benefit from the tax free income and growth that your ISA enjoys when you die.   Regardless of how much the surviving spouse has contributed to their own ISA in that tax year, the Additional Permitted Subscriptions (“APS”) allowance allows the survivor to transfer the whole of their late spouse’s ISA, while still retaining the ISA tax benefits.

To be eligible for the APS allowance, you must have been married or in a civil partnership at the date of death.  For subscriptions made in cash, the time limit for using the APS allowance is three years from the date of death, or 180 days after the completion of the administration of the estate.  If contributions are being made ‘in-specie’ (i.e. if you are transferring a stocks and shares ISA) these have to be made no later than 180 days after the assets are distributed to the surviving spouse.

If you have any questions about ISAs or estate administration in general, please contact Wansbroughs’ Private Client team on wealth@wansbroughs.com.


Posted By Our Wills, Tax, Trusts & Probate Team