What is an APS allowance?
When an ISA account holder dies, their spouse or civil partner can subscribe the value of the deceased’s ISA account into their own ISA account, including opening a new ISA account for this purpose.
This facility has been available since December 2013, and the rules governing this process changed in April 2018, hence I will discuss the rules relating to death’s post 6th April 2018.
This allowance is known as an Additional Permitted Subscription, APS for short.
Where can use this allowance?
This allowance is available to the surviving spouse regardless of whether they are the beneficiary of the deceased’s estate. They can choose to transfer the assets of the deceased’s ISA account into their own ISA account, or they can choose to use their own funds to make use of this allowance if they so choose.
The allowance can be used with the ISA provider who managed the deceased’s ISA account, or they can utilise the allowance with another provider.
Value of APS allowance
To ascertain the allowance available to the spouse, the provider will calculate the value of the deceased’s ISA account at the date of death and date of distribution of the deceased’s estate. The higher of these two values will be the spouse’s allowance. For this purpose, the provider will generally take the date the deceased’s account is closed as the date of distribution. There is no limit to the potential value of the APS allowance.
What can be subscribed as part of an APS Subscription
An APS subscription will often be made in cash, but if the deceased held a stocks and shares ISA account, then non-cash assets can be transferred from the deceased’s account to the surviving spouse’s stocks and shares ISA account. Again, if the spouse does not have an ISA account, then one can be opened to utilise this allowance.
If you are using your APS allowance with a different provider to the one who managed the deceased’s ISA, then you can only do so in cash, i.e., non-cash assets would have to be sold, in order to use as part of an APS subscription.
How long can you wait?
Non-cash APS subscriptions can only be done up to 180 days after the date of distribution of the deceased’s estate, as mentioned above, this will usually be considered the date the executor’s contact the ISA provider of the deceased, to instruct what action to take with their assets.
A cash APS subscription can take place up to 3 years after distribution of the estate.
What forms do you need?
Your ISA provider will need the spouse to sign an APS authority form, provide a copy of the grant of probate and a letter from the executors of the deceased’s estate authorising the use of the deceased’s ISA account to satisfy the APS allowance. Again, the spouse does not have to use the deceased’s ISA for this purpose, they can use their own funds.