What happens to my ISA when I die?

Individual Savings Accounts (ISAs) are a brilliant way to save and invest tax efficiently while you’re alive, but what happens to those savings and investments when you die? Can they be inherited by your loved ones and what are the tax implications? These are some very important questions when it comes to planning your estate and inheritance, and we can help to answer them.

So, what will happen to my ISA on death?

When you die, any savings and investments you’d held in an ISA will be passed onto the beneficiaries of your estate. That is anyone you’ve named in your Will to inherit your ISA - and this can be whoever you like.

But because it forms part of your estate, there’ll be unavoidable admin to work through before your ISA can be paid out. While this is happening, your ISA would become what’s known as a ‘continuing ISA’. This means no new payments can be made into it, but it’ll keep its tax benefits. So, there’ll be no tax to pay on any capital gains or income made in your ISA while your estate is being dealt with.

The account will continue like this until the first of the following events happens:

  • It’s closed by your executor
  • Your estate administration is completed
  • Three years and one day pass after your death

Are ISAs free from inheritance tax?

Inheritance tax on your ISA depends on who you leave it to and how much your total estate is worth. If you leave what's in your ISA to your spouse or civil partner, it won’t be subject to inheritance tax (IHT) because of what’s known as the ‘spousal exemption’.

However, ISA inheritance tax may be due if the assets are left to someone else. It’ll depend on the value of your estate and whether it’s worth more than the current inheritance tax threshold.

Is there an inherited ISA allowance?

If you have a spouse or civil partner, on your death, they’ll inherit an additional ISA allowance, called the ‘additional permitted subscription’ or APS allowance. It means you can pass on not just the total wealth in your ISA(s) to them, but its tax-free status too.

Your spouse or civil partner will receive an additional permitted subscription for each ISA you have. This APS allowance is equal to the value of your ISA(s) on the day you die, or when it is closed (whichever is higher).

How do additional permitted subscriptions (APS) work?

The APS allowance will be on top of your surviving spouse/civil partner’s own ISA allowance for the tax year (currently £20,000).

If they’ll inherit any of the cash or investments from your ISA they may be able to pay them into their own ISA to use the extra APS allowance. It’s also possible to use the APS allowance with their own cash, for example if you’re leaving some of the ISA cash and investments to someone else.

Do AJ Bell accept additional permitted subscriptions?

If you have an AJ Bell Stocks and shares ISA, your surviving spouse/civil partner can use their APS allowance with us, if they also have (or open) their own AJ Bell ISA. We don’t currently accept APS allowances from ISAs held with other providers.

Learn more about additional permitted subscriptions


Important information: Remember that investments go up and down in value, and you could lose money as well as make it. How you’re taxed will depend on your circumstances, and ISA and tax rules can change. We don’t offer investment advice, so you’ll need be confident you can manage your ISA yourself. These articles are for information purposes only and are not a personal recommendation or advice.


ISA allowances 2023/24

The ISA allowance is the maximum you can put into your individual saving accounts per tax year.

Learn about our ISA

An AJ Bell Stocks and shares ISA is an easy, efficient way to invest. It’s tax free, so more of what you make stays in your pocket.


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