In practice this meant that under the original rules once the estate was dealt with and the time came to move the assets from the deceased’s account to the survivor’s Isa, the APS alone was not sufficient to allow the whole (former) Isa holdings to be moved across due to growth of assets between date of death and date of transfer.
This frequently meant that the survivor would have to use some of their own Isa allowance too, or if they had insufficient spare allowance then a number of assets would have to remain outside the Isa wrapper.
Isa investors who died on or after 6 April 2018
From 6 April 2018 the rules changed, primarily to allow surviving spouses/civil partners who were the beneficiaries of the deceased’s Isa to have the whole fund (including growth) transferred to them under the APS rules.
For investors that died on or after 6 April 2018 the account can continue without the tax wrapper having to be removed.
This is known as a “continuing account of a deceased investor”.
This account can continue to receive interest, dividends and gains in respect of the investments held and this will remain tax-free.
This can continue until the earlier of:
- completion of the administration of the deceased’s estate
- closure of the account
- third anniversary of the death of the account investor
No further subscriptions can be made, but the personal representatives of the deceased investor can continue to actively manage investments held in the account.
When it comes to the APS the survivor has the choice of using the value of the Isa at the date of death, or at the date the account is closed.
It is also possible that where the deceased had accounts with more than one Isa manager that they could choose the date of death with one manager and date the account is closed with another – but where any one Isa manager has multiple accounts for the deceased they should not work out the APS by using a mix of account values at date of death and when the account is closed.
It is also worth noting that you do not have to wait until the estate is settled to use the APS – the two things are not directly related, and as mentioned earlier, the APS is not related to who actually benefits from the Isa assets (although often it will be the spouse who is the beneficiary).
This means that a spouse who has other cash available could immediately use the APS following the death of the Isa investor, even if the estate is not settled and the Isa account of the deceased is not then closed for several months.
In this instance it would be the value of the Isa at date of death that would be used for the maximum APS.
