Death of an ISA investor
A normal ISA accounts becomes Continuing ISA accounts upon the death of the holder of that ISA account. For a more detailed guide to ISA account death and APS (additional permitted subscriptions) procedures click here.
Deaths post April 6th, 2018
The concept of continuing ISA accounts only applies to ISA account holder deaths after April 6th 2018. Before this date, when an investor died their ISA account lost all ISA related tax benefits as at the date of death. ISA accounts ceased to be ISA accounts as at date of death.
The rules were changed for deaths post April 6th 2018 to take into account the length of time it often takes for the administration of the deceased’s estate to be completed. Hence at date of death, post April 6th 2018, the deceased’s ISA account becomes a “Continuing ISA Account”. All interest, dividends and capital gains earned, during the administration of the deceased’s estate, are tax free.
How long do Continuing ISA accounts last?
Continuing ISA accounts remains in existence for 3 years after the death of the investor, or until the date when the executors of deceased’s estate decide to distribute the assets held within the continuing ISA account, i.e., the completion of the administration of deceased’s estate.
Can Continuing ISA accounts be transferred?
The spouse of the deceased will receive an allowance equal to value of the deceased’s continuing ISA accounts. If deceased held multiple ISA accounts with different provider, then the spouse will be entitled to an allowance for each ISA account.
The spouse can subscribe that allowance into his or her own ISA account by using their own funds. If the spouse holds or opens an ISA account with the same provider as the deceased, then the cash and stock held in the deceased’s ISA account can be used to satisfy the allowance. This is known as an Additional permitted subscription, or APS for short.