Inheriting an ISA UK — The Additional Permitted Subscription (APS) Explained

When your spouse or civil partner dies, their ISA does not simply transfer to you with its tax-free status intact. Without action on your part, the money you inherit from an ISA sits outside the tax-free wrapper — and any future income or growth on it will be fully taxable.

The Additional Permitted Subscription (APS) is the mechanism that fixes this. It gives you a one-off extra ISA allowance equal to the value of your late partner’s ISA, allowing you to shelter the equivalent amount in your own ISA and preserve the tax-free protection.

This guide explains how the APS works, who qualifies, the deadlines involved, and exactly what you need to do.

For the broader ISA picture, see our ISA Allowance 2026/27 guide and the What to Do With an Inheritance guide.

What Happens to an ISA When Someone Dies?

The ISA itself does not die with the account holder. Immediately after death:

1. The ISA becomes a “continuing ISA” — sometimes called an administration period ISA
2. The tax-free wrapper continues during the administration of the estate (up to three years)
3. No new subscriptions can be made to the deceased’s ISA after death
4. The surviving spouse or civil partner receives an APS equal to the ISA’s value at date of death

The ISA assets pass to whoever inherits them under the will or the rules of intestacy. This is separate from the APS — you receive the APS allowance regardless of whether you personally inherit the ISA money.

Key point: The APS is an allowance, not a direct transfer of assets. You can use any money — not just the inherited ISA funds — to fill your APS allowance.

What Is the APS Worth?

Your APS allowance equals the higher of:

• The value of your late partner’s ISA at the date of death
• The value of the ISA at the date it is closed (for continuing ISAs that remain open during probate)

Your APS is in addition to your own annual ISA allowance of £20,000. So in the tax year your partner dies, you could potentially subscribe up to £20,000 (your annual allowance) plus the full APS amount.

Who Can Claim the APS?

The APS is available only to a surviving spouse or civil partner. It does not matter whether you:

• Lived together at the time of death (you qualify even if separated, provided not legally divorced)
• Are the beneficiary of the ISA (you get the APS even if someone else inherits the money)
• Were named on the ISA (the APS is based on the legal marriage/civil partnership, not account registration)

Who cannot claim the APS:

• Unmarried partners and cohabitees — no matter how long the relationship
• Children, parents, siblings, or other relatives
• Anyone not in a legal marriage or civil partnership with the deceased

This is one of the financial disadvantages of not being married. An unmarried partner of 30 years gets no APS; a spouse married for six months does.

How Does the APS Work in Practice?

Here is a step-by-step example:

The scenario: David’s wife Sarah dies in June 2026. Sarah had a Stocks and Shares ISA worth £85,000 at the date of death. Sarah’s will leaves her estate to David.

What David receives:

• The £85,000 ISA assets (as the beneficiary under Sarah’s will)
• An APS allowance of £85,000 — separate from and additional to his own £20,000 annual ISA allowance

What David does:

1. Contacts Sarah’s ISA provider and notifies them of the death
2. Confirms he wishes to use the APS
3. Subscribes up to £85,000 into an ISA using the APS (this can be the inherited money or other funds he has)
4. All £85,000 now sits inside David’s own ISA — tax-free forever

Without APS: David takes the £85,000 out of the estate and puts it in a general savings account. Future interest is taxable above the Personal Savings Allowance (£500 for higher-rate taxpayers in 2026/27). If he invests it, capital gains above £3,000/year are taxable.

With APS: All future income and growth on the £85,000 is permanently tax-free.

The Deadline: Do Not Miss This

You must claim and use the APS within:

• 3 years of the date of death, OR
• 180 days after the completion of estate administration (whichever is later)

Missing this deadline means the APS entitlement is lost permanently. There is no way to reclaim it after the deadline has passed.

Practical advice: Do not wait until close to the deadline. Contact the ISA provider as soon as you have registered the death and received the death certificate. Probate can take many months, and paperwork can cause delays.

Step-by-Step: How to Claim the APS

1. Register the death with the ISA provider — you will need the death certificate
2. Request confirmation of the APS amount — the provider will confirm the value of the ISA at date of death (or at closure, if higher)
3. Decide where to hold your APS — you can use the deceased’s provider or transfer to a new ISA provider of your choice
4. Open or designate an ISA for the APS subscription — it can be a Cash ISA or Stocks and Shares ISA
5. Subscribe the funds — using either the inherited money or any other funds you have available
6. Keep records — retain the APS confirmation paperwork for your tax records

Some providers have a specific APS claim form. Others process it through their standard ISA opening process. Check with the provider directly.

Can I Split the APS Across Multiple Providers?

Yes — if your late partner held ISAs with more than one provider, you receive a separate APS for each ISA. You can use each APS with the respective provider, or transfer them to new providers.

You can also split the APS allowance into a Cash ISA and a Stocks and Shares ISA, up to the total APS value.

Does the APS Count Towards My Annual ISA Allowance?

No. The APS is entirely separate from your £20,000 annual ISA allowance. You can use both in the same tax year. In the year of your partner’s death, you could subscribe:

• Up to £20,000 under your own annual ISA allowance
• Up to the full APS amount (e.g. £85,000) as a separate subscription

These are independent — using the APS does not reduce your £20,000 annual allowance.

What About Inheritance Tax?

ISAs are part of the deceased’s estate and are subject to Inheritance Tax if the estate exceeds the nil-rate band thresholds. The ISA tax-free status does not exempt the funds from IHT.

However, assets passed between spouses and civil partners are exempt from IHT under the spousal exemption — so David inheriting Sarah’s £85,000 ISA above would pay no IHT, regardless of the estate size.

For full details on IHT thresholds and spousal exemption, see our Inheritance Tax guide.

Continuing ISA: What Happens During Probate?

When a Stocks and Shares ISA holder dies, the ISA does not immediately lose its tax-free status. It becomes a continuing ISA (or administration period ISA) — a special status that:

• Preserves the tax-free wrapper during the estate administration period
• Allows income and gains within the ISA to remain tax-free for up to 3 years from the date of death
• Does not allow any new subscriptions from anyone (including the spouse) during this period

Once the estate is administered and the assets distributed, the continuing ISA status ends. The APS clock is running from the date of death — not from when the continuing ISA closes.

APS vs Direct ISA Transfer: Key Points

There is no mechanism to simply transfer an ISA from one person to another. The APS is the only way to preserve the tax-free status after a partner’s death.

Summary

The APS is one of the most valuable and most overlooked financial benefits available to bereaved spouses and civil partners. A £100,000 ISA shelters tens of thousands of pounds in potential future tax on income and gains. Losing that protection by missing the APS deadline or not knowing it exists would be a costly mistake.

The three things to do:

1. Contact the ISA provider and notify them of the death as soon as you have the death certificate
2. Confirm the APS amount and your deadline
3. Use the APS before the deadline — it does not need to be the inherited money, and it sits on top of your own annual allowance

For further reading: ISA Allowance 2026/27 | What to Do With an Inheritance | Pension IHT Changes from April 2027

Related Guide

• ISAs UK: Cash, Stocks & Shares, Lifetime, Junior and Transfer Rules