Guidance

Manage additional permitted subscriptions into an ISA

If you're an ISA manager find out how to manage additional permitted subscriptions for a surviving spouse or civil partner of a deceased investor.

Overview

From the 6 April 2015 additional permitted subscriptions on top of the annual ISA subscription limit are available to the surviving spouse or civil partner of an ISA investor who died on or after 3 December 2014.

The deceased and the surviving spouse or civil partner must have been living together at the date of death. They must not have been separated:

  • under a court order
  • under a deed of separation
  • in circumstances where the marriage or civil partnership has broken down

Find out about additional permitted subscriptions

Subscriptions:

  • can be made to you, the manager who holds the deceased’s ISA or another manager who agrees to accept the subscriptions
  • are limited to the value of the deceased’s ISA at their date of death if the investor died on or before 5 April 2018
  • can be either the value of the deceased’s ISA at their date of death or the point the ISA ceased to be a continuing account of a deceased investor if the investor died on or after 6 April 2018
  • must be made within specific time limits
  • can be made to a cash, stocks and shares, or an innovative finance ISA
  • can also be made to a Lifetime ISA if the investor is resident in the UK, but will count towards the Lifetime ISA payment limit but not the annual overall ISA additional permitted subscription limit
  • have to be made to an ‘adult’ cash ISA, if the surviving spouse or civil partner is 16 or 17
  • can be made in cash or inherited non-cash ISA assets
  • are available whether or not the surviving spouse or civil partner inherited the deceased’s ISA assets
  • can be made by non-residents
  • cannot be made to (or from) a Junior ISA
  • count as previous year subscriptions for all other ISA purposes
  • can be shown on statements by any relevant description, including ‘transfer’

How to deal with requests to disclose an ISA value

ISA regulations give you authority, on request to disclose the value of a deceased account holder’s ISA to their surviving spouse or civil partner.

You must be satisfied that the person making the request is the surviving spouse or civil partner of the deceased ISA investor, and the request should include the deceased’s:

  • name and address
  • National Insurance number, if known
  • date of birth
  • date of death
  • the date of marriage or civil partnership to the applicant

The request should also include a declaration that the:

  • applicant is the surviving spouse or civil partner
  • applicant and deceased were living together at the deceased’s date of death

You can decide whether to accept requests other than in writing.

Requests may be made by someone on behalf of the surviving spouse or civil partner using the guidance in applying for an ISA on behalf of someone else.

How to value ISAs

Stocks and shares ISA

You should value these ISAs using the guidance in withdrawals of investments from a stocks and shares ISA.

Lifetime ISA

Lifetime ISAs are valued at the point that the account ceases to be a continuing account of a deceased investor and includes:

  • government bonuses due to be paid on subscriptions made on or before the date of death of the investor
  • interest accrued or gains made up to the point that the ISA tax wrapper is removed

Innovative finance ISA non cash assets

The value is the outstanding principal balance, which is the capital amounts outstanding plus any interest due but unpaid on the loans at either the:

  • date of death
  • point the account ceases to be a continuing account of a deceased investor

When the investor had more than one ISA

Investor died on or before 5 April 2018

Before the 6 April 2018, if the deceased investor had a number of ISAs with you, there is a single additional permitted subscription limit based on the combined values of those ISAs at the investor’s date of death.

Investor dies on or after 6 April 2018

From the 6 April 2018 the single additional permitted subscription limit is based on the combined values of the ISAs at the date each ISA ceases to be a continuing account of a deceased investor.

The additional permitted subscription should not be worked out using a mix of account values at either the date of death or the value of other accounts at the point they cease to be continuing accounts.

If the deceased ISA investor held accounts with more than one ISA manager, the surviving spouse or civil partner can choose to use the additional permitted subscription value worked out at the date of death with one ISA manager and the value at the date of account closure with the other ISA manager.

The spouse or civil partner of a deceased ISA investor can have an additional permitted subscription that is the higher of the value of the ISA accounts at the:

  • date of death of the investor
  • point they cease to be a continuing account of a deceased investor

If the spouse or civil partner decides to use the additional permitted subscription worked out at the date of death of the investor, by subscribing some or all of the additional permitted subscription into their own ISA, they cannot then ask you for the additional permitted subscription worked out on the value of the accounts at the point they cease to be a continuing account of a deceased investor.

Examples of the additional permitted subscription limit.

Where a financial institution’s ISA business is conducted under a number of different HMRC ISA manager references for claims and reporting purposes, the additional permitted subscription limits can be worked out at either:

  • financial institution level
  • separately for the deceased investor’s ISA holdings under each HMRC ISA manager reference

You must have processes in place to make sure that the additional permitted subscriptions do not exceed the higher of these 2 valuations.

When to include interest on cash deposits

Interest accrued at the date of death should only be included in accordance with the guidance on death of an investor.

Making additional permitted subscriptions

The surviving spouse or civil partner can make subscriptions with either:

  • you, the manager who holds the deceased’s ISA
  • another manager who agrees to accept the subscriptions

Where an additional permitted subscription is made, any further payments up to the limit must be made with the same manager. Any unused balance cannot be used with another manager.

If you’re unable to accept the additional permitted subscription you should contact HMRC. This could happen when:

  • you close your ISA book to new business before the surviving spouse or civil partner has subscribed up to the additional permitted subscription limit
  • you plan a bulk transfer of accounts and the surviving spouse or civil partner wants to move their ISA and any unused part of the additional permitted subscription limit to a manager of their choice (rather than the bulk transfer default option)

You can accept additional permitted subscriptions on a provisional basis pending receipt of the relevant information and declarations. This subscription, or any amount over the limit, must be removed from the ISA, or will count towards the investor’s annual subscription limit, where the:

  • missing information or declarations are not received within 30 calendar days
  • subscriptions accepted on a provisional basis exceed the value of the deceased’s ISA, as notified by you

You must not accept an additional permitted subscription into a Lifetime ISA where either the:

  • investor is not eligible to subscribe to a Lifetime ISA
  • subscription, together with other current year payments, goes above the Lifetime ISA payment limit or the ‘one Lifetime ISA only per tax year’ rule

How to deal with subscriptions

The surviving spouse or civil partner can make subscriptions to the following old, new or a combination of both ISAs:

  • cash
  • stocks and shares
  • innovative finance
  • Lifetime ISA

ISA managers who agree to accept additional permitted subscriptions can insist on opening a new ISA if this helps monitor the surviving spouses additional permitted subscription limit.

An ISA opened solely to receive the additional permitted subscription will not cause the saver to breach the ‘one ISA of each type per tax year’ rule. A surviving spouse or civil partner can only pay £4,000 into one Lifetime ISA each tax year.

Where the deceased held ISAs with a number of different managers the surviving spouse or civil partner will have additional permitted subscription limits with each manager.

The surviving spouse or civil partner must give the chosen ISA manager the information and declarations required and confirm they have not made any additional permitted subscriptions to you, the manager who held the deceased’s ISA.

The chosen manager must send you a notice stating they are willing to take the additional permitted subscription from the spouse or civil partner. They should also include:

  • the deceased’s full name
  • the permanent residential address of the deceased at the date of death
  • the date of birth and date of death of the deceased
  • the deceased’s National Insurance number (if known)
  • sufficient information to identify the deceased’s ISA

There is no need to agree a ‘transfer’ date as the underlying ISA is not being transferred.

You must send the chosen manager a notice confirming the information above within 30 calendar days of receiving the notice. You must also include:

  • the value of the ISA at the date of death or the value at the point the ISA ceased to be a continuing account of a deceased investor (whichever is the higher)
  • that the surviving spouse or civil partner has not made any additional permitted subscriptions to you and that you will not accept any such subscriptions in the future, or provide details of the additional permitted subscription allowance to any other manager

If you do not receive a death certificate, the 30 calendar day time limit can be suspended until it’s received.

The new manager must keep records of the notices.

How bulk transfers are dealt with

When a bulk transfer includes a surviving spouse’s or civil partner’s ISA to which an additional permitted subscription has been made, details of any remaining balance of the additional permitted subscription should be passed to the new ISA manager.

The new manager could be either a:

  • default bulk transfer ISA manager
  • new ISA manager chosen by the surviving spouse or civil partner

If you can accept an ‘in specie’ transfer of a stocks and shares ISA, then ‘in specie’ subscriptions can be made to the ISA manager receiving the bulk transfer of accounts or the new ISA manager chosen by the surviving spouse or civil partner.

This means the surviving spouse or civil partner is not disadvantaged by the bulk transfer.

If you cease to offer ISAs and have not accepted any additional permitted subscriptions before the bulk transfer takes place, details of the additional permitted subscription limit should be passed to the new manager.

You should contact HMRC where, exceptionally, the surviving spouse or civil partner is unable to make:

  • additional permitted subscriptions with you or another ISA manager
  • an ‘in specie’ subscription following a bulk transfer

A surviving spouse or civil partner can make one or more additional permitted subscriptions, as long as the total does not exceed the permitted additional subscription limit.

If you accept one or more additional permitted subscriptions is a matter for the terms and conditions of the ISA products. Where only one additional permitted subscription is accepted you should make it clear to the surviving spouse or civil partner that any unused balance will be ‘lost’.

When subscriptions can be made

Subscriptions can be made at any time from the date of death, subject to the time limits.

The time limit runs from the date the surviving spouse or civil partner becomes beneficially entitled to the non-cash assets. This would be the date you’re formally notified that the assets are in the ownership of the surviving spouse or civil partner. HMRC takes a pragmatic view but will query cases where there is evidence of avoidance or manipulation.

Additional permitted subscription cannot be paid into a Lifetime ISA by a surviving spouse or civil partner,if:

  • the annual Lifetime ISA payment limit will be exceeded
  • they have already paid into their Lifetime ISA and in that year
  • they are aged 50 years or over
  • they are non-resident in the UK

When an additional permitted subscription has been made, the surviving spouse or civil partner can transfer their savings under the normal ISA rules, with the additional permitted subscription being treated as previous years’ subscriptions.

Further guidance can be found in annual payment limit for Lifetime ISA and transferring an ISA).

Additional permitted subscriptions are treated as previous year subscriptions for all ISAs apart from Lifetime ISAs, where it counts towards the annual payment limit for the Lifetime ISA.

Information and declarations required

Before the first additional permitted subscription can be made the surviving spouse or civil partner must tell you the deceased’s:

  • full name
  • permanent residential address at the date of death
  • date of birth and date of death
  • National Insurance number (if known)
  • date the marriage or civil partnership took place
  • identity of the account manager who managed the deceased’s ISA

When making an additional permitted subscription the surviving spouse or civil partner must declare:

  1. They’re the surviving spouse or civil partner of the deceased.
  2. They were living with the deceased within the meaning of section 1011 of the Income Tax Act 2007 at the date of the deceased’s death.
  3. The subscription is made under the provisions of regulation 5DDA of the ISA regulations.
  4. The subscription is being made:
    • for ‘in specie’ transfers, within 180 days of beneficial ownership passing to the surviving spouse or civil partner
    • for cash subscriptions, within 3 years of the date of death
    • if later than 3 years, 180 days of the completion of the administration of the estate

For deaths between 3 December 2014 to 5 April 2015, the 180 days runs from 6 April 2015 for distributions before 6 April 2015.

A declaration confirming 1 and 2 above is only needed when the first subscription is made by a surviving spouse or civil partner. A declaration confirming 3 and 4 above must be made every time an additional permitted subscription is made.

Exceptionally, an enduring declaration covering 1 to 4 above can cover the 3 year period from the deceased’s date of death, but only where the:

  • ISA accepts only additional permitted subscriptions
  • your system prevents additional permitted subscriptions after the 3 year period unless supported by a declaration covering 3 and 4 above

You can, if you choose:

  • use a ‘generic’ declaration covering 1 to 4 above for all additional permitted subscriptions
  • accept an additional permitted subscription declaration in good faith unless you know it to be untrue

The information and declarations should be made in accordance with the ISA application and transfer processes. They can be given by someone on behalf of the investor .

You must keep written documentation or scanned images. Alternatively, you can apply the ‘applications not in writing’ procedures by making a written declaration using the information provided on the form and send this to the investor.

The original paper declaration can then be destroyed.

You can use a combined additional permitted subscription transfer application instead of a separate transfer and application form if you choose.

Industry ‘model’ application forms are available.

How non-cash assets are used

Non-cash assets are:

  • any stocks and shares ISA
  • Lifetime ISA
  • qualifying investments other than cash deposits
  • the following cash ISA, or Lifetime ISA, qualifying investments:

Where a surviving spouse or civil partner inherits non-cash ISA assets, these may be used to make an additional permitted subscription ‘in specie’ (without having to be sold and the subscription made in cash) provided these assets were the ones held at the date you were told of the death of the investor.

The option of an ‘in specie’ subscription is not available if the spouse or civil partner decides to make additional permitted subscriptions to a manager other than the one who held the ISA of the deceased.

Only inherited non-cash ISA assets can be used to make an additional permitted subscription ‘in specie’.

The title to non-innovative finance ISA assets must have remained with you or your nominee. If the title has moved the assets cannot be used to make an additional permitted subscription. The subscription must be made in cash instead.

For innovative finance assets, the peer-to-peer loan agreements and crowdfunding debentures must have remained under the management of the deceased’s ISA manager at all times.

For both stocks and shares ISAs and stocks and shares held in Lifetime ISAs, the value of the assets at the time the additional permitted subscription is made counts towards the additional permitted subscription limit (the value of the deceased’s ISA at their date of death). The assets should be valued using the guidance in withdrawals of investments from a stocks and shares ISA or Lifetime ISA.

Where shares held by the deceased have gone x-dividend (‘XD’), the value of the dividend payments should be included in the value of the shares.

Innovative finance ISA non cash assets should be valued at their date of death value, that is, the capital amounts outstanding plus interest due on the loans(s) but unpaid at the date of death.

Where the deceased investor’s account was a Lifetime ISA, the additional permitted subscription limit includes any government bonus accrued, but not yet paid, on the account.

Investor died on or before 5 April 2018

The additional permitted subscription limit is not affected by any change in asset value during the estate’s administration. If the value of the assets increase during administration it’s not possible to subscribe them all to the ISA unless the:

  • deceased held a combination of ISAs with the same manager and the surviving spouse’s or civil partner’s single combined additional permitted subscription limit with that manager is sufficient to frank the increase in value
  • surviving spouse or civil partner ‘transfers in’ an additional permitted subscription limit from another ISA manager of the deceased sufficient to frank the increase in the value

In these circumstances, the combined date of death values may be sufficient to allow non-cash inherited ISA assets that have increased in value to be subscribed.

If the value of the non-cash assets decrease they can all be subscribed ‘in specie’ and a cash additional permitted subscription made to ‘top up’ to the value at date of death of the investor.

Where the assets change after you’re notified of the death of the investor as a result of some corporate action, those ‘new’ assets will be eligible for in-specie transfer.

Investor dies on or after 6 April 2018

The additional permitted subscription limit is affected by any change in asset value during the administration period. If the value of the assets increase during the estate’s administration it will be possible to transfer them all to the ISA if the surviving spouse or civil partner has not chosen to use the additional permitted subscription limit based on the value of the ISA at the date of death of the investor.

You must not accept a subscription into a Lifetime ISA if:

  • together with current year payments, it exceeds the Lifetime ISA payment limit
  • the investor is not eligible to subscribe to a Lifetime ISA, for example because the investor is 50 years of age or more or is non-resident in the UK

You must make ‘in specie’ additional permitted subscriptions with non-cash assets within 180 days of the distribution of the assets to the surviving spouse or civil partner.

Where the estate of a deceased ISA investor makes an interim in specie distributions followed by a final distribution, each will have a 180 day window for subscriptions to be made.

The time limits run from the date the surviving spouse or civil partner becomes beneficially entitled to the non-cash assets. You should treat this as being from the date you’re formally told that the assets are in the ownership of the surviving spouse or civil partner.

HMRC will query cases where there is evidence of avoidance or manipulation.

For distributions before 6 April 2015, and deaths between 3 December 2014 to 5 April 2015, the 180 days will run from 6 April 2015.

If you’re not providing any suitability advice to the surviving spouse or civil partner where additional permitted subscriptions are made ‘in specie’, the Financial Conduct Authority have confirmed you do not need to check suitability.

You should, however, make sure the surviving spouse or civil partner is provided with risk and investment information, in line with your standard process, about the investments, and suggest they consider taking investment advice.

Making cash additional permitted subscriptions

Additional permitted subscriptions can be made by a surviving spouse or civil partner using sums they have inherited or other cash they have. They can make their additional permitted subscriptions to any combination of existing or new ISAs that they have.

A series of subscriptions up to the value at the date of death can be made provided the total does not exceed the additional permitted subscription limit that the spouse or civil partner is entitled to use.

A new Lifetime ISA for additional permitted subscriptions cannot be opened if the:

  • investor is not eligible to open a Lifetime ISA because they’re 40 years of age or more or non-resident in the UK
  • investor has already paid into another Lifetime ISA in that tax year
  • subscription would breach the annual Lifetime ISA payment limit

The time limit for making cash subscriptions ends 3 years after the date of death, or if later, 180 days after the administration of the estate is complete.

Where the death of the ISA holder is between 3 December 2014 to 5 April 2015, the 3 year period starts on 6 April 2015, but the additional permitted subscription limit can only be the value of the deceased’s ISA at their date of death.

What to report

You do not need to report, at account level, the amounts received for all additional permitted subscriptions to the following, as they are treated as previous year subscriptions:

  • cash
  • stocks and shares
  • Innovative Finance ISA

However, if made into a Lifetime ISA (to the extent that it may not breach the Lifetime ISA annual payment limit) it must be returned as a qualifying addition on the Lifetime ISA return.

What to do if you receive a void or partial repair notice

You must recalculate the additional permitted subscription limit if you receive a void or partial repair notice after being notified of the account holder’s death.

If you’ve notified the additional permitted subscription limit to a provider chosen by the surviving spouse or civil partner, you must notify that provider of the revised amount.

If subscriptions have been made by the surviving spouse or civil partner in excess of the revised additional permitted subscription limit, the provider managing the account of the surviving spouse or civil partner should contact HMRC.

HMRC will then issue an appropriate void or repair notice.

Published 5 April 2018
Last updated 19 July 2018 + show all updates
  1. Guidance for the additional permitted subscription limit has been updated.

  2. First published.