Inheriting an ISA From Your Spouse: The Additional Permitted Subscription Explained

Can a Spouse Inherit an ISA Tax-Free?

Yes — a spouse or civil partner can inherit ISA money free of inheritance tax and keep it inside an ISA wrapper using the Additional Permitted Subscription. Two separate rules do the work:

• The spouse exemption means anything left to a husband, wife or civil partner is normally free of inheritance tax, however large. ISAs are part of the estate, but passing them to a spouse costs nothing.
• The APS lets the survivor put an amount equal to the deceased’s ISA value into an ISA of their own. This is on top of their normal £20,000 annual allowance (2025/26) and doesn’t reduce it.

Without the APS, a surviving partner who inherited a £200,000 ISA would only be able to shelter £20,000 a year of it again — it would take a decade to get it all back inside an ISA, paying dividend tax and capital gains tax along the way. The APS fixes that in one go. It applies where the death was on or after 3 December 2014, and the couple were married or in a civil partnership and not separated. HMRC’s guidance is on gov.uk.

How Much Is the Additional Permitted Subscription?

For deaths on or after 6 April 2018, the APS is the higher of the ISA’s value at the date of death and its value when it stops being a “continuing account of a deceased investor”.

After someone dies, their ISA doesn’t close straight away. It becomes a continuing account and keeps its tax-free status — no income tax or capital gains tax on interest, dividends or growth — until the earliest of: the estate administration being completed, the account being closed, or the third anniversary of the death. No new money can be added during this period.

Because the investments stay invested, their value can move. Taking the higher of the two values means the survivor isn’t penalised if markets rise while probate grinds on, and doesn’t lose out if they fall:

On top of the APS, the survivor still has their own £20,000 for the current tax year. In the first scenario that’s £185,000 they could put into ISAs in a single tax year.

What Are the APS Deadlines?

A cash APS must be made within three years of the death or, if later, within 180 days of the estate administration being completed. There’s a separate, shorter window if you’re moving the actual investments across:

Miss the deadline and the APS is gone for good — there is no extension. In practice, most of the delay comes from probate itself, so the three-year floor gives breathing space. But grief and paperwork make it easy to forget, and an unused APS can’t be reclaimed later.

Do You Have to Inherit the ISA Itself to Get the APS?

No — the APS belongs to the surviving spouse or civil partner whoever inherits the ISA investments under the will. This surprises a lot of people. If the will leaves the ISA to the children, the children receive the investments (outside an ISA wrapper), but the surviving spouse still gets an APS equal to its value.

The survivor then funds the APS from other money. For FIRE households, that opens up some useful options:

• Shelter your own General Investment Account. Sell GIA holdings and use the cash for the APS — effectively a very large Bed and ISA. CGT still applies to the sale, so it may be worth spreading sales over the APS window to use more than one £3,000 annual exempt amount.
• Use other estate assets. Cash from the house sale, life insurance payouts or the deceased’s GIA can all fund the APS once they reach you.
• Move cash savings. Money sitting in taxable savings accounts can go into a cash ISA using the APS, freeing the survivor from the Personal Savings Allowance limits.

Unmarried partners don’t get the APS or the spouse exemption from inheritance tax. They can inherit the money, but it loses its ISA status and can only go back into an ISA through their normal £20,000 a year. For long-term cohabiting FIRE couples with large portfolios, that’s worth weighing — see our guide to what happens to your ISA when you die.

How Do You Claim the APS?

Tell the deceased’s ISA provider, get written confirmation of the APS value, then open or top up an ISA that accepts APS subscriptions. The steps usually look like this:

1. Notify each provider. Send a copy of the death certificate. The ISA becomes a continuing account and the provider will explain the APS.
2. Request the APS value. Each provider confirms the value of the ISAs it held. You’ll need this figure for the provider you subscribe with.
3. Choose where to put it. The deceased’s provider generally has to accept your APS; other providers can choose whether to, so check first. The money can go into a cash, stocks & shares or innovative finance ISA.
4. Complete the APS application. This is a separate form from a normal ISA application, confirming you were married or in a civil partnership and living together at the time of death.
5. Pay in or transfer. Some providers accept the APS in instalments; others want it in one go. In-specie transfers keep you invested; cash subscriptions mean reinvesting yourself.

The tax saving is real. Keeping £165,000 in a global tracker inside an ISA rather than a GIA avoids dividend tax on around £2,970 a year of dividends (at a 1.8% yield). After the £500 dividend allowance, that’s roughly £216 a year for a basic-rate taxpayer and £834 for a higher-rate taxpayer — plus capital gains tax at 18% or 24% on all future growth, and the simplicity of never filing for it.

How Should FIRE Couples Plan for the APS?

Make sure both partners know the APS exists, where every ISA is held, and that a will is in place. The rule only helps if the survivor claims it in time. A few practical steps:

• Keep a simple list of accounts — providers, account types and rough values — somewhere your partner can find it.
• Balance ISAs across both of you. With two allowances as a couple, you can shelter £40,000 a year, and the APS means neither partner loses the wrapper if the other dies.
• Think about the pension change. From April 2027, most unused pension funds will count towards the estate for inheritance tax. Read our pension inheritance tax guide — it may affect whether you draw ISA or pension first in retirement.
• Review your drawdown plan after a death. A survivor who suddenly holds both portfolios may have a much larger ISA pot, and a different FIRE number, than before.

Frequently Asked Questions

Work Out Your Own Numbers

If you’re planning together, or rebuilding a plan on your own, it helps to see how a combined ISA pot grows over time:

• ISA Millionaire Calculator — see how a lump sum plus regular contributions builds towards £1 million tax-free

A surviving spouse may also be able to inherit part of their partner’s State Pension, depending on when each of you reached State Pension age. The full new State Pension is £11,502 a year (2025/26) from 67 — see gov.uk/state-pension for details.