The short answer is yes, but there are some points to consider, which I discuss below.
What is your APS allowance?
Firstly, APS stands for Additional Permitted Subscription. When a holder of an ISA account dies, their spouse or civil partner automatically receives an APS allowance equivalent to the value of the deceased ISA account. This allowance can used to make an additional subscription to the surviving spouse’s ISA account.
The surviving spouse gets this allowance regardless of whether they are the beneficial of the deceased’s estate and even if the assets within the ISA have not been left to the spouse – therefore the spouse can use their own funds or the deceased’s ISA in order to satisfy the APS allowance.
How long do you have to use your APS allowance?
Your APS allowance is not tied to the tax year at all. You have 3 years from the date of death to use your APS allowance, though it can be longer if the deceased’s estate takes a long time to complete probate.
Using the deceased ISA to satisfy your APS allowance
If the assets in the deceased’s ISA have been willed to the spouse, then the spouse may use the APS allowance with the same ISA provider who managed the deceased’s ISA. If that is the case, then for a stocks and shares ISA, the assets can be transferred in-specie(this means the shares can be transferred directly from the deceased’s ISA to the spouse’s ISA account, without being encashed), but this must take place within 90 day of death, or the completion of the administration of the estate. After this deadline, the APS can only be used with cash.
Transferring an APS allowance
The surviving spouse can contact the ISA provider who managed the deceased’s ISA to open an ISA and use the APS allowance with them, if they don’t already have an existing account.
If the spouse wishes to use their APS allowance with another provider, then they should contact that provider, give them details of the deceased ISA account and ask them to transfer in the allowance to be used with them. Note, the APS allowance transfer is not connected to the deceased ISA, it is simply a declaration that the allowance can be used with the new provider. The source of funds used for the APS does not have to be from the deceased ISA, but it can be.
ISA providers cannot refuse to transfer out an APS allowance, but some providers are not willing to allow an APS allowance to be transferred in. Please check with a provider before opening an account, if your intention is to transfer in an APS.