Inherited ISAs: choosing the APS value and meeting the deadlines

An additional permitted subscription (APS) can preserve ISA capacity after the death of a spouse or civil partner. The difficult part is often deciding which value to use, how the subscription will be funded and which deadline applies.

Treat those as separate decisions. A provider valuation establishes an allowance; it does not establish who inherits the investments or confirm that the proposed contribution can be accepted.

Separate the inheritance from the subscription allowance

The deceased’s assets pass under their will or the applicable intestacy rules. The APS is a separate entitlement for an eligible surviving spouse or civil partner. It can be available even when somebody else inherits the ISA investments.

That distinction matters where, for example, investments pass to adult children. The survivor may still use their own cash to fund an APS. The children do not acquire the survivor’s subscription allowance simply because they inherit the assets.

The APS sits alongside the survivor’s normal annual ISA allowance. It does not make the deceased’s investments exempt from inheritance tax: ISA investments remain part of the estate for that purpose. See GOV.UK’s guidance on ISAs after death.

A useful file note therefore answers two questions: “Who receives these investments?” and “Who can use the additional allowance?” Record the evidence for each answer independently.

Check eligibility and the relevant death date

An APS is available following the death of an ISA investor on or after 3 December 2014. The claimant must have been their spouse or civil partner and meet the living-together requirement at death. Separation under a court order or deed, or circumstances indicating a permanent separation, can prevent eligibility. Living apart because one partner is in a care home does not itself remove entitlement.

For deaths from 3 December 2014 to 5 April 2018, the allowance uses the date-of-death value. For deaths on or after 6 April 2018, the continuing-account rules introduce a second possible valuation point. GOV.UK distinguishes these two periods.

This article concentrates on cash and stocks and shares ISAs. Keep Lifetime ISA cases separate: their eligibility and payment restrictions also need consideration.

Understand when the continuing account ends

Following a death on or after 6 April 2018, the ISA can continue to shelter income and gains during administration. New subscriptions cannot be paid into the deceased’s account.

The continuing status ends on the earliest applicable event: completion of estate administration, closure of the ISA, or the statutory time limit. GOV.UK describes the provider closing the account three years and one day after death where neither earlier event has occurred.

Do not assume that the continuing-account period and the survivor’s APS subscription period end together. Put separate entries in the case record for account closure, completion of administration and the relevant contribution deadline.

Choose the valuation before the first payment

For a qualifying post-5 April 2018 death, compare the date-of-death value with the value when the account ceases to be a continuing account. The higher amount can determine the APS.

However, once the survivor starts using the date-of-death allowance, they cannot subsequently switch to the later valuation. Where several accounts form one manager’s APS calculation, do not mix date-of-death and cessation values. Different managers can use different valuation bases. Confirm the manager’s aggregation with the provider. HMRC’s APS guidance explains the valuation rules.

Worked illustration: growth before the account ends

Assume a survivor is eligible, has made no APS payments and has sufficient cash available. Their late partner held one ISA worth £86,000 at death. It is worth £93,500 when it ceases to be a continuing account.

The potential APS is £93,500. The difference is £7,500: £93,500 minus £86,000. If the survivor had already started using the £86,000 date-of-death allowance, that later £7,500 increase would not become additional APS capacity.

The example illustrates a valuation consequence, not a recommendation to delay. The case record should explain the chosen timing alongside the client’s need for access to funds.

Match the subscription method to its deadline

Method	Timing	Practical check
Cash APS	Within three years of death, or 180 days after estate administration finishes if later	Obtain the administration completion date before finalising the deadline.
In-specie APS	Within 180 days of beneficial ownership passing to the survivor	Record the distribution and provider notification dates.

In specie means subscribing the inherited investments without selling them. If the deceased’s investments are to be transferred in specie, the APS must be used with the ISA manager holding those assets; normally, the assets must have remained with that manager or its nominee. The survivor may need to open a new ISA with that manager. A cash APS can use another willing provider. It does not need to be the deceased’s provider or the same ISA type: for example, an APS arising from a cash ISA can fund a stocks and shares ISA. Confirm acceptance before requesting movement of assets.

APS payments can be staged where the product permits. Once payments begin with a manager, the unused allowance cannot ordinarily be used with another manager. If an ISA that has received an APS is transferred elsewhere, any unused APS allowance is lost. Future subscriptions with the new provider are then limited to the normal £20,000 annual ISA allowance. Provider terms may permit only one payment, so check this before making a small initial subscription. See HMRC’s provider guidance.

Build a record that explains the decision

Obtain the deceased’s name, address, birth and death dates, National Insurance number if known, the marriage or civil partnership date and relevant declarations. Request the chosen provider’s current application requirements.

Alongside those documents, keep a short decision record:

• The provider’s confirmed allowance and valuation basis.
• Whether any APS payment has already been made.
• The intended funding method and agreed deadline.
• Who is responsible for obtaining outstanding estate information.
• The provider’s confirmation that it accepts the proposed payment or investments.

Avoid describing the case simply as an “inherited ISA transfer”. That label can conceal different instructions. The final recommendation should identify the allowance, the assets or cash being subscribed, the receiving account and the action that completes the process.

Technical position checked on 17 September 2026. For financial advisers.