ISA Additional Permitted Subscription allowance

In addition to the annual ISA subscription allowance, an Additional Permitted Subscription allowance (APS allowance) is available to the surviving spouse or civil partner of a deceased ISA investor, where the ISA investor died on, or after, 3 December 2014.

What is an APS allowance?

An APS allowance allows the surviving spouse or civil partner to make additional permitted subscriptions into an ISA up to the value of the deceased investor’s ISA at the date of death.

If the date of death fell on or between the ex-dividend date and pay date of the fund(s) held by the deceased ISA investor, the resulting income distribution amount, net of any tax reclaimed by us from HMRC, is added to the value at the date of death to get the full APS allowance. This is not available on accumulation share classes as accrued income is already reflected in the share price.

If the date of death was on or after 6 April 2018, the APS allowance will equal the higher value of the ISA as at the date of death and the date the ISA ceased to be a continuing account of a deceased investor. The ISA will cease to be a continuing account of a deceased investor on the earlier of the ISA being closed and three years after the date of death. Where a spouse or civil partner chooses to use part or all of their APS allowance whilst the ISA remains open as a continuing account, i.e. before the assets are realised, their APS allowance will be the value of the deceased’s ISA as at the date of death. If the date of the account closure falls on or between the ex-dividend date and pay date of the fund(s) held by the deceased ISA investor, the resulting income distribution amount will be added to the APS allowance.

Where the deceased investor held a number of ISAs with one ISA manager, the surviving spouse or civil partner will have one APS allowance for the combined value of those ISAs at the investor’s date of death or, if the date of death was on or after 6 April 2018, the higher value of those ISAs as at the date of death and the dates the ISAs ceased to be continuing accounts of a deceased investor.

Where the deceased investor held ISAs with a number of different ISA managers, the surviving spouse or civil partner will have an APS allowance for the value of each of those ISAs at the investor’s date of death or, if the date of death was on or after 6 April 2018, the higher value of those ISAs as at the date of death and the dates the ISAs ceased to be continuing accounts of a deceased investor.

Who is eligible for an APS allowance?

An APS allowance is available to the surviving spouse or civil partner of a deceased ISA investor, where the ISA investor died on, or after, 3 December 2014.

The surviving spouse or civil partner needs to have been married or in a civil partnership with the ISA investor and not legally separated, or likely to become legally separated, at the time of death. An APS allowance is not available if the surviving spouse or civil partner was separated under a court order or Deed of Separation or separated under other circumstances that were likely to become permanent.

How can an APS allowance be used?

The APS allowance can be used to make subscriptions into any ISAs offered by an ISA manager.

A single additional permitted subscription, or a series of additional permitted subscriptions, can be made as long as, in aggregate, they do not exceed the value of the deceased investor’s ISA at the date of death or, if the date of death was on or after 6 April 2018, the higher value of the ISA as at the date of death and the date the ISA ceased to be a continuing account of a deceased investor, and are made within the permitted timescales.

Subscriptions can be made in the form of cash or in the form of stock.

Subscriptions in the form of cash

Additional permitted subscriptions made in the form of cash must be invested within three years of the date of death or, if later, within 180 days of the completion of the administration of the deceased investor’s estate.

Where the death of the ISA investor occurred in the period 3 December 2014 to 5 April 2015, the three year period starts on 6 April 2015.

Additional permitted subscriptions in the form of cash can be made with either the ISA manager who held the deceased investor’s ISA or another ISA manager. Once an additional permitted subscription has been made with an ISA manager, any further additional permitted subscriptions must continue to be made with the same ISA manager. Any unused balance cannot be transferred to another ISA manager.

Please note the availability of an APS allowance is not dependent on the surviving spouse or civil partner inheriting the assets held in the deceased investor’s ISA.¹ Additional permitted subscriptions can be made using any other cash they have available for investment.

Once the surviving spouse or civil partner has made an additional permitted subscription, the assets of the ISA can be transferred to another ISA manager with the additional permitted subscriptions being treated as previous tax year ISA subscriptions.

¹ Where the assets are inherited by the surviving spouse or civil partner and they intend to sell them and use their APS allowance to invest the sale proceeds in an ISA, this option is only available after probate has been granted.

Subscriptions in the form of stock

Where additional permitted subscriptions are made in the form of stock, re-registration of the deceased ISA investors’ holdings must be made within 180 days of beneficial ownership passing to the surviving spouse or civil partner. Where the estate makes an interim distribution(s), followed by a final distribution, each will have a 180 day window for subscriptions to be made.

If the value of the non-cash assets decreases after the date of death, they can all be subscribed in the form of stock and an additional permitted subscription can be made in the form of cash to ‘top up’ the total amount subscribed to the value at date of death.

If the value of the non-cash assets increases after the date of death and the date of death was prior to 6 April 2018, it is not possible to subscribe them all: only the value as at the date of death can be subscribed. This will be done by allocating the value as at the date of death proportionately across all funds held, with any remaining holdings sold and the residual value paid to the surviving spouse or civil partner.

Unlike cash subscriptions, only inherited ISA assets can be used to make an additional permitted subscription in the form of stock and this is on the condition they are made with the ISA manager who held the deceased ISA investor’s ISA.

Once the surviving spouse or civil partner has made additional permitted subscriptions, they can transfer the assets of the ISA to another ISA manager with the additional permitted subscriptions being treated as previous tax year ISA subscriptions.

Using your APS allowance to invest in an Invesco ISA

You can make a single additional permitted subscription or a series of additional permitted subscriptions as long as, in aggregate, they do not exceed the value of the deceased investor’s ISA at the date of death or, if the date of death was on or after 6 April 2018, the higher value of the ISA as at the date of death and the date the ISA ceased to be a continuing account of a deceased investor, and are made within the permitted timescales.

If your spouse or civil partner held an ISA with Invesco you can:

• re-register the holdings and make the subscription into a stocks and shares ISA
• sell any inherited assets from the deceased investor’s ISA and reinvest the sale proceeds
• use their own money to subscribe up to value of the APS allowance.

If you already hold an ISA with us, the investments bought with the additional permitted subscriptions will be invested in this ISA. If you do not already hold an ISA with us, a new ISA will be opened.

Where the deceased investor did not hold their ISA with Invesco, you will need to transfer your APS allowance to us before we can accept any subscriptions.

Transferring your APS allowance from another ISA manager

If your spouse or civil partner held an ISA with another ISA manager, and you wish to use the APS allowance to invest in an Invesco ISA, you can instruct us to request the transfer of the APS allowance to us (see Supporting literature below for the relevant form).

We will contact the deceased investor’s ISA manager for the information we require, inform you when the transfer is complete and the amount of your APS allowance. You can then make additional permitted subscriptions in the form of cash. Additional permitted subscriptions in the form of stock are not available from another ISA manager.

Transferring your APS allowance to another ISA manager

If your spouse or civil partner held an ISA with Invesco, and you wish to use the APS allowance to invest with another ISA manager, you can transfer the APS allowance to another ISA manager; you will need to contact the other ISA manager who will arrange for this transfer to take place with us.

We will only be able to act on the other ISA manager’s instruction if you have not already used the APS allowance to make additional permitted subscriptions with us.

Supporting literature

ICVC ISA Additional Permitted Subscription application forms
Form A – Application to use an APS allowance to invest in a stocks and shares ISA
Form B – Application to transfer your APS allowance from another ISA provider to Invesco

What to do on the death of an investor: The next steps