When an Isa account holder dies, it’s possible for their spouse or civil partner to inherit an additional Isa subscription, as long as they were living together at the time of death. This allows them to effectively ‘inherit’ their partner’s Isa. This extra allowance is the additional permitted subscription (APS).
In April there were two changes to the APS rules. First, for any deaths before 6 April 2018 the Isa tax advantages stopped on date of death. Now, for deaths on or after 6 April 2018 the Isa tax advantages will continue until the administration of the estate is complete (or until three years after date of death if earlier), unless the personal representatives choose to close the Isa.
The second change is where the Isa account holder died on or after 6 April 2018, the spouse or civil partner has the choice of two values of APS – either the value at date of death, or the value when the Isa is closed and the tax advantages stop. This will often mean the spouse or civil partner is able to choose a higher APS value, giving them more flexibility to make the most of their inherited APS.
The APS can be transferred to an Isa with the same Isa manager or a different Isa manager (if they accept it – they don’t have to).
For a Nucleus client to make use of an APS held with another Isa manager, the additional subscription level first must be transferred to the Nucleus Isa. Once that has gone ahead, the spouse or civil partner can pay in funds to meet this additional allowance – from their private funds, their general account, or by transferring the original Isa to the new Nucleus Isa.
For more information on the opportunities offered by APS check out our factsheet on the Illuminate Technical Studio . There is also a Nucleus adviser guide available for download on the platform library, which outlines how APS can be transferred to Nucleus Isas.