Inheriting an ISA: The Additional Permitted Subscription Explained

Since 2015, surviving spouses and civil partners have had a specific, valuable right when they inherit an ISA - one that’s separate from, and in addition to, their own annual ISA allowance, yet remains widely under-used simply because it isn’t well known. (It applies where the ISA holder died on or after 3 December 2014, and could be used from 6 April 2015.)

What the Additional Permitted Subscription actually is

When someone dies, their surviving spouse or civil partner is entitled to an Additional Permitted Subscription (APS) - an extra one-off ISA allowance based on the value of the deceased’s ISAs. For deaths on or after 6 April 2018, the APS is set at the higher of the ISA’s value at the date of death and its value when it stops being a ‘continuing account’ of the deceased (see below) - so the survivor doesn’t lose out if the investments rise in value during estate administration. This is entirely separate from, and doesn’t reduce, the survivor’s own normal annual ISA allowance (£20,000 for 2026/27).

Why this matters

Without the APS, a surviving spouse inheriting, say, £150,000 held in their late partner’s ISA could only shelter £20,000 of it (their own annual allowance) back into an ISA wrapper in any single tax year - the rest would have to sit outside a tax-efficient wrapper, potentially exposed to tax on future interest, dividends, or gains. The APS allows the survivor to effectively ‘re-wrap’ the inherited amount, protecting it from tax in the same way it was protected during the original ISA holder’s lifetime.

Who’s eligible

Only a surviving spouse or civil partner qualifies for the APS - it doesn’t apply to children, other relatives, or unmarried partners inheriting an ISA. The ISA holder and the surviving spouse must have been married or in a civil partnership at the date of death (living together as an unmarried couple, however long, doesn’t qualify), and they must not have been separated at that point - a spouse who was separated under a court order or a formal deed, or in circumstances likely to be permanent, can’t claim the APS.

How to use it

• With the same ISA provider - the APS can be used with the deceased’s ISA provider, and a cash APS can be paid in from the survivor’s own money even before the estate has been fully administered.
• With a different provider - a cash APS can also be used with a different ISA provider, provided that provider agrees to accept it, giving the surviving spouse some flexibility to consolidate or choose a provider that suits them. Transferring the actual investments (‘in specie’) rather than cash generally has to be done with the deceased’s own ISA provider.
• The time limits are set by law: a cash APS must be used within three years of the date of death, or within 180 days of the estate administration completing if that’s later. An in-specie APS must be made within 180 days of the investments being passed to the surviving spouse.

The APS is separate from actually inheriting the money

It’s worth being clear that the APS is a tax allowance, not the inheritance itself - the surviving spouse still needs to actually inherit the ISA’s value (either because it was left to them in the will or under intestacy rules) before they have the ISA money itself to use the APS allowance on. Unlike a life insurance policy written in trust, an ISA can’t be routed around the estate this way, so how it’s dealt with in the will (or under intestacy) still determines who actually receives the money (see our dedicated article on why writing a life insurance policy in trust matters). If the ISA’s value passes to someone other than the surviving spouse under the will, the APS is still available to the spouse based on the ISA’s value, but they’d need their own separate funds to actually use it, since they wouldn’t have inherited the ISA money itself.

What happens to an ISA’s tax-free status during estate administration

An ISA continues to have its tax advantages (no tax on interest, dividends, or gains) for a limited period after the account holder’s death - until the earliest of the estate administration being completed, the ISA being closed, or three years after death - after which any growth becomes taxable in the normal way if the ISA hasn’t yet been formally dealt with.

A worked example

A widow inherits her late husband’s £80,000 Stocks & Shares ISA, and its value hasn’t changed by the time the account is closed. She can use her own £20,000 annual ISA allowance for new savings, plus an £80,000 Additional Permitted Subscription based on her late husband’s ISA - allowing her to shelter £100,000 in ISAs, considerably more than her own allowance alone would permit. The APS isn’t tied to a tax year, so she can use it at any point within the time limit, alongside her normal allowance each year.

The bottom line

The Additional Permitted Subscription is a genuinely valuable, if under-publicised, entitlement for surviving spouses and civil partners inheriting an ISA - checking with the ISA provider (either the deceased’s own, or a new provider of the survivor’s choice) as part of estate administration ensures this allowance isn’t missed or left unused within its time limit.