When someone dies, their ISAs don’t lose their tax-free status straight away, and a surviving spouse or civil partner gets an extra ISA allowance so the money can stay tax-free. This page covers both.
The rules
When someone dies their ISA stays tax-free until the executor closes it, the estate is settled, or 3 years after the death, but it counts towards their estate for Inheritance Tax. A surviving spouse or civil partner can pay in an extra amount, on top of their own allowance, up to the value of the ISA at death or when it closed.- For deaths on or after 6 April 2018, the ISA becomes a 'continuing account of a deceased investor', stays free of Income Tax and Capital Gains Tax until it's closed, and can't take new payments.
- It closes when the executor closes it, when the estate is settled, or 3 years after the death.
- ISA savings count towards the estate for Inheritance Tax.
- A surviving spouse or civil partner can add a tax-free amount on top of their own allowance, up to the value of the ISA when they died or when it was closed (the additional permitted subscription).
- The extra allowance must be used within 3 years of the death, or 180 days after the estate is settled if that's later (180 days from receiving them, for investments transferred in directly).
- The money itself goes to whoever inherits it under the will; the extra allowance goes to the spouse or civil partner either way.
- There's no inherited allowance if the death was before 3 December 2014.
The continuing account
After the death, the ISA becomes a continuing account of a deceased investor. Interest and gains stay free of Income Tax and Capital Gains Tax until the account closes, which happens when the executor closes it, when the estate is settled, or 3 years after the death, whichever comes first. No new money can be paid in. For a stocks and shares ISA, the provider can be told to sell the investments and pay the proceeds to the estate or beneficiary, or to transfer them to the surviving spouse’s or civil partner’s ISA if they’re with the same provider.
The extra allowance for a spouse or civil partner
The additional permitted subscription (APS) is an extra allowance for the surviving spouse or civil partner, on top of their normal ISA allowance. It’s worth up to the value of the ISA either when their partner died or when the account closed, and they can use it even if the ISA money itself went to someone else under the will.
Example. A husband dies with £60,000 in ISAs. His wife can pay up to £60,000 into ISAs as an additional permitted subscription, on top of her own £20,000 allowance for the year, whether or not she inherits the £60,000.
How to claim it
Contact your own ISA provider or your late partner’s. Not every provider accepts additional permitted subscriptions, so ask before you plan to use it. The provider will need details of your spouse or civil partner and their ISAs, and it can take the payment in cash or, for investments, by transferring them in.
Deadlines
- Cash: within 3 years of the date of death, or 180 days after the administration of the estate is complete if that’s later.
- Investments transferred directly: within 180 days of them passing to you.
If your spouse or civil partner died before 3 December 2014, there’s no extra allowance.
Related guides
- ISAs guide: the ISA types, the allowance and the main choices in one place
- ISA allowance: the normal yearly allowance
- Inheritance Tax: how estates are taxed
- ISA transfers: moving ISAs between providers