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What is the APS ISA allowance and why could it matter to you?

As the surviving spouse or civil partner of someone who dies with money or investments in an ISA, you’ll be eligible for an Additional Permitted Subscription (APS) that allows you to inherit assets within the ISA tax wrapper.

Here’s what you need to know about the APS ISA allowance, including who’s eligible, how to claim, and what you can do with your additional allowance.

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Important information - investment value can go up or down and you could get back less than you invest. If you're in any doubt about the suitability of a Stocks & Shares ISA, you should seek independent financial advice. The tax treatment of this product depends on your individual circumstances and may change in future. If you are uncertain about the tax treatment of the product you should contact HMRC or seek independent tax advice.

What is the APS ISA allowance?

An APS allowance is an additional ISA allowance you receive as the surviving spouse or civil partner of someone who has died with ISA savings or investments.

In essence, an APS gives you a higher, one-off ISA allowance when inheriting cash or investments contained within an ISA.

This is in addition to your annual ISA allowance. So, if you claim an APS of £50,000, this will be combined with your ISA allowance of £20,000 in the 2021/22 tax year to give you a temporarily-raised allowance of £70,000.

Who is eligible for an APS ISA allowance?

There are some key criteria you must meet to be eligible for an APS. This includes:

  • Your spouse or civil partner must have died on or after 3 December 2014, which is when the APS rules came into effect.
  • You must have been married to or in a civil partnership with the deceased.
  • You must have been living with your spouse or civil partner at the time of their death.

You can still claim an APS if either of you were living in a care home at the time of their death. However, you are not eligible for an APS if you were separated or estranged from your partner.

How much is the APS allowance?

The APS allowance available to you will depend on when your spouse or civil partner died.

On or before 5 April 2018

If your spouse or civil partner died between 3 December 2014 and before or on 5 April 2018, the APS you can claim is equal to the value of the assets in your spouse or civil partner’s ISA(s) at the time of their death.

On or after 6 April 2018

If your spouse or civil partner died on or after 6 April 2018, their ISA(s) becomes what’s known as a “continuing ISA(s)”.

In this case, your APS is the higher of:

  • The value of the ISA(s) at the date of death
  • Or the value of the ISA(s) when it ceases to be a continuing ISA(s).

An ISA ceases to be a continuing ISA at the earliest of the following events:

  • The administration of the estate is complete
  • All ISA funds are withdrawn and the account is closed
  • Three years after the date of death have passed.

How do I claim my APS?

To claim your APS, you will need to complete an application form and submit it to the ISA manager of the broker or platform where you want to make additional contributions.

This form will require information such as:

  • Your spouse or civil partner’s name, address, date of birth, and date of death
  • The date of your marriage or civil partnership
  • A signed declaration that you are the surviving spouse or civil partner of the deceased, and that you were still living together at the time of death.

This ISA manager will then contact the equivalent manager of the deceased’s ISA on your behalf. They will do this for each platform where your late partner had an ISA, and your APS allowance will be the total value of all these ISAs.

Using your APS ISA allowance

Once you have your APS allowance, you can use it in various different ways.

While you can use your entire increased allowance all at once, you don’t have to. You can choose to use it in several lump sums if you wish.

You can choose where you want to use it, too. This doesn’t have to be with your late spouse or civil partner’s provider, but with whichever provider or platform you choose.

This could be into an existing ISA you already have, or you can open a brand new account.

You also don’t have to use your APS on the same type of ISA that your partner had. So for example, if your spouse or civil partner had a Cash ISA that gave you an APS of £30,000, you could contribute that money into a Stocks and Shares ISA instead.

In fact, you don’t actually have to inherit the actual cash or assets in the ISA to receive an APS. Your late spouse or partner may leave them to a child or grandchild and you will still receive an APS.

You can then make the most of this additional allowance using your own money or investments, provided that you do so within the time limits depending on their death.

Junior ISAs cannot include APS

One thing to bear in mind is that you cannot use an APS ISA allowance to subscribe to a Junior ISA.

You are still entitled to an APS if you are aged between 16 and 18 and your spouse or partner dies. However, this cannot be paid into a Junior ISA and so must be paid into an adult Cash ISA.

Time limits on additional permitted subscription payments

There are some key time limits when you must have made use of your APS allowance by for you to still be eligible for it.

Cash transfers

You must use your APS allowance for cash within:

  • Three years of your spouse or civil partner’s date of death
  • 180 days of the completion of the administration of the estate

This is for whichever is later of these two thresholds.

In specie transfers

You may decide to transfer your deceased spouse or civil partner’s investments “in specie”. This means, rather than selling and moving them as cash, they are transferred while still invested.

In this case, the APS must be used with the same provider that your partner used and must be done so within 180 days of the distribution of the assets to you as the surviving spouse or partner.

You will need to open a new ISA with that provider if you do not already have one. You can then transfer this ISA to a provider of your choice.

FAQs about APS ISA allowance

Can you have an APS for more than one ISA?

Yes, your APS allowance will be the total value of all your spouse or civil partner’s ISAs, including Cash ISAs, Stocks and Shares ISAs, Innovative Finance ISAs, and Lifetime ISAs.

Can I use my APS with another provider?

Yes, you can use your APS allowance with another provider, as long as the platform or broker you wish to use allows APS payments. That means you don’t have to use your APS with the provider that your late spouse or partner held their investments with.

Bear in mind that you can only do this once, as long as you have not yet made any other ISA contributions as part of your APS.

What is the £20,000 ISA allowance?

The £20,000 ISA allowance is the maximum amount an individual can contribute to any ISAs they hold in a single tax year. This is separate from your APS allowance.

While the annual ISA allowance is £20,000 in the 2021/22 tax year, it is subject to change and could rise or fall at the start of each new tax year on 6 April.

Please note:

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

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