In his 2014 Autumn Statement, George Osborne announced that any accumulated ISA could effectively be inherited by a surviving spouse or civil partner in the form of an increased ISA allowance for them. This is known as the Additional Permitted Subscription (APS).
Anyone who was married or in a civil partnership with someone who died on or after 3 December 2014 can now apply for an additional ISA allowance, known as the Additional Permitted Subscription (APS).
The APS is equal to the value of the ISA held by the deceased on the date of death. For example, if your spouse died on or after 3 December 2014 with an ISA valued at £50,000, this would be your APS. Where an investor held ISAs with several companies, a separate APS will be available for each.
An individual is eligible for an APS if:
No, the APS is separate from the ISA allowance (£15,240 for the 2016/17 tax year). The surviving spouse or civil partner can use their ISA allowance in the normal way, separately from any APS.
Example: If your spouse died on 1 January 2015 with an ISA valued at £50,000, you could contribute £65,240 (£50,000 plus £15,240) to your ISA for the 2016/17 tax year and protect your savings and investments from the taxman. Remember tax rules can change and benefits depend on personal circumstances.
Cash: investors can make a cash contribution using their own cash or cash inherited from the deceased.
Investments: investments held in the deceased's ISA can also be transferred into the surviving spouse or civil partner's ISA directly without needing to be sold. Please note, investments can only be transferred into an ISA with the same company with which the deceased held their ISA.
Where the value of any inherited ISA investments is less than the APS (i.e. the value of investments have gone down since the date of death), a top up payment can also be made with cash. Where the value of any inherited ISA investments is greater than the APS (because they have risen in value since the date of death), investments can only be transferred into the ISA up to the value of the APS.
Yes, providing the new provider accepts APS transfers. At Hargreaves Lansdown, we accept APS transfers from other providers. Where an APS is transferred to a new provider, contributions can only be made with cash.
If transferring investments from your surviving spouse, you can only transfer to an ISA with the same provider as the deceased spouse. For example, if your spouse held ISA investments with Hargreaves Lansdown, you could only transfer the investments to an ISA with Hargreaves Lansdown.
It is the value of the investments at the time of transfer that counts towards the APS subscription. All investments can fall as well as rise in value so you could get back less than originally invested.
Once the APS has been registered, the surviving spouse or civil partner needs to read our Key Features, Terms & Conditions (including Tariff of Charges) and Important Investment Notes, then complete and return the APS ISA Application Form. The APS does not need to be used all at once, so a surviving spouse or civil partner could make several contributions to make use of their APS.
Please note, if you're transferring your APS from another provider, you will need to fill out the APS transfer form. Before transferring please check you won't incur excessive exit penalties and you will benefit from transferring.