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What Happens to Your ISA When You Pass Away?


Strategizing for the future requires thoughtful consideration of your financial assets, with a particular focus on Individual Savings Accounts (ISAs). This in-depth guide elucidates the nuanced aspects surrounding the destiny of your ISA in the event of your passing. It delves into key elements like the ongoing ISA status, potential inheritance tax implications, and the Additional Permitted Subscription (APS) designed for spouses or civil partners – all integral components for maintaining good budgets and financial planning.

1. Continuing ISA:

  • Definition: After your death, your ISA becomes a ‘continuing ISA’ for a limited period, remaining open until the completion of estate administration, closure by your executor, or the end of three years and one day from your date of death.
  • Tax Benefits: The continuing ISA retains its tax benefits during this period, allowing for further growth or returns without income tax and capital gains tax implications.
  • Inheritance Tax: As part of your estate, the ISA is subject to inheritance tax, but it can be left to any chosen beneficiary in your will.

2. Handling a Stocks and Shares ISA:

  • Executor’s Role: Executors of a deceased’s stocks and shares ISA can choose to sell the investments and transfer the cash to the beneficiary or transfer the investments directly without liquidation.
  • Flexibility: This flexibility allows for strategic decisions based on market conditions and the preferences of the deceased and their beneficiaries.

3. Inheritance Tax on ISAs:

  • General Rule: ISAs are subject to inheritance tax, following the same principles as other assets in your estate.
  • Spousal Exemption: If left to a spouse or civil partner, the ISA is exempt from inheritance tax, provided the estate value is below the inheritance tax limit.
  • Additional Permitted Subscription (APS): Surviving spouses or civil partners inherit an APS, granting them an additional ISA allowance based on the higher of the ISA value at death or closure.

4. Additional Permitted Subscription (APS):

  • Definition: APS is a one-off contribution allowance for surviving spouses or civil partners, separate from their annual ISA allowance.
  • Calculation: APS is calculated based on the ISA value at death or closure, providing an additional opportunity for tax-efficient savings.
  • Flexibility: The APS can be applied even if the deceased leaves the ISA to someone else, and it does not impact the recipient’s standard annual ISA allowance.

5. Special Cases (Dec 3, 2014, to Apr 5, 2018):

  • Distinct Rules: If a spouse or civil partner passed away between December 3, 2014, and April 5, 2018, there are specific rules governing APS, and individuals in this category should seek tailored advice.


Understanding the posthumous fate of your ISA is crucial for effective estate planning. From the continuing ISA phase to inheritance tax considerations and the benefits afforded to surviving spouses or civil partners through APS, this guide provides a comprehensive overview. Seeking professional advice for specific circumstances is recommended to navigate any nuances in inheritance tax laws and ensure a seamless transition of assets. Planning for the future involves not only accumulating wealth but also strategically passing it on to loved ones in a tax-efficient manner.

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