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What happens to my ISA when I die?

ISAs are a simple, tax-efficient way to save and invest. But what happens to an ISA on death can appear complex. Get the full picture on ISAs and inheritance tax and more with our in-depth guide.

Individual Savings Accounts (ISAs) have proven hugely popular since their launch in 1999, offering millions the chance to earn tax-free interest and investment returns. But in the hurry to set up an account and choose the right investments, it’s easy to lose sight of the ISA rules on death.

The processes around inheritance and the ISA allowance on death can change depending on your beneficiary. Read on to explore the main rules and ensure a smooth transition for you and your loved ones.

What happens to an ISA on death?

Your ISA won’t come to a sudden end as soon as you pass away. Instead, the account will continue until:

  • It’s closed by your executor
  • Your estate administration finishes
  • Three years and one day after your death – if neither of the other two conditions are met.

No further contributions are allowed into your ISA after death. But the existing funds will still have the opportunity to grow – and remain free of income tax and capital gains tax – until the end date.

How can you inherit an ISA?

The good news is that any savings you’ve worked hard to build in an ISA won’t go to waste after you’re gone. You can leave them to whoever you choose – so long as they’re named as a beneficiary in your will. You just need to remember that your loved ones will only inherit the cash or investments inside your ISA, rather than the account itself. The tax advantages of the ISA will stop for any future gains and income unless the assets are reinvested by your beneficiary using the allowances they have available.

With a Stocks & Shares ISA, your beneficiary may have the option to:

  • Request the sale of the investments and receive the money
  • Transfer your investments into their own ISA using their annual allowance
  • If your husband, wife or civil partner is the beneficiary, they could ask for the assets to be transferred into an ISA using their “additional permitted subscription” allowance (see below for details)

Are ISAs subject to inheritance tax?

Any assets held inside ISAs are considered part of your estate when calculating inheritance tax. That means there may be inheritance tax to pay, depending on the size of your estate on death.

Your ISA’s liability to inheritance tax may also be shaped by the beneficiary’s status. For example, your husband, wife or civil partner could benefit from the so-called ‘spouse exemption’. Under this rule, the surviving spouse in a couple can usually inherit their partner’s estate tax-free.

What is the additional ISA allowance on death?

ISAs can offer a range of tax benefits during your lifetime. And there may be a further financial boost for your husband, wife or civil partner after inheriting an ISA too.

If you’re part of a married couple or civil partnership, your husband, wife or civil partner can claim an extra ISA allowance – in addition to their own – after you die. It’s called the ‘additional permitted subscription’ and was introduced in April 2015. Before that date, the tax benefits of an ISA were lost on death.

Under this rule, your husband, wife and civil partner may be eligible for a one-off additional ISA allowance equal to the value of:

  • Your ISA when you passed away, or
  • The account when it was closed

For example, if your ISA was worth £60,000, your husband, wife or civil partner could receive an additional permitted subscription of £60,000, on top of their normal £20,000 annual ISA allowance.

What are the other inheritable ISA allowance rules?

An additional permitted subscription is usually available for three years after someone has died or 180 days after an estate has been finalised. Your other half will normally just need to fill out an application form or contact the account provider to claim this inherited ISA allowance.

They’ll generally need to provide information such as your:

  • Full name
  • Date of birth and death
  • Official marriage or civil partnership date

In a further boost, you can leave your ISA to another person in your will without impacting your husband, wife or civil partner’s ability to claim the additional permitted subscription.

For example, if you had an ISA worth £50,000, you could leave this to your daughter in your Will. Your daughter would then receive the £50,000 once you passed away. However, your other half would still be able to claim a one-off inherited ISA allowance worth £50,000 too.

What inheritance and ISA allowance rules do other beneficiaries face?

Just remember that the additional ISA allowance on death is only available to people who are legally married or in a civil partnership. So, if another relative or friend inherits the contents of your ISA instead, they’ll receive the assets but not their tax-free status.

The tax-free wrapper around the ISA investments will vanish and the assets inside will be subject to normal tax rules. Depending on their value, they may also be subject to capital gains tax on any gains since the date of your death if sold.

Maximise your ISA savings with Bestinvest

Explore the world of ISAs with our range of expert guides and articles. From the different types on offer to the main ISA transfer rules, we’ve got plenty of useful information – for people at all stages of their lives.

Keen to take the first step? Find out more about our Stocks & Shares ISA and Junior ISA.

Frequently asked questions about ISA rules on death

No, the contents of an ISA are not generally exempt from inheritance tax. That’s because they are included within your taxable estate when you pass away. Husbands, wives and civil partners can normally inherit each other’s estates tax-free, however, which is a useful break to be aware of.

A continuing ISA is simply the name given to your ISA from the moment of your death until the closure of the account. This continuing ISA will only be closed when your executor gives permission or when all the estate administration is done. A maximum limit of three years and one day applies to these processes.

Yes, you can receive the contents of your child’s Junior ISA so long as you inherit their estate. Just bear in mind that their other half could be their beneficiary if they’re older than 16 and married or in a civil partnership. Learn more about Junior ISA rules with Bestinvest.


No, any interest earned on your ISA savings should remain tax-free from the time you pass away up until the date when the account closes. The same goes for any investments you hold in a Stocks & Shares ISA. Inheritance tax is the main form of taxation your loved ones need to consider.

It’s possible for your child to inherit the value of your ISA. However, they won’t receive the same tax benefits that are available to married couples and civil partners inheriting an ISA. The money may fall within the remit of inheritance tax.

Important information

Nothing in this article is intended to constitute advice or a recommendation, and you should not take any financial decision based on its content. If you are in doubt as to any course of action you should seek professional advice. Prevailing tax rates and reliefs depend on your individual circumstances and are subject to change. ISA rules may also change. Investors should always remember that investments go down as well as up and they may not get back the amount originally invested.

How Bestinvest can help

Looking for an efficient way to invest? Become a Bestinvestor with a Stocks & Shares ISA (Individual Savings Account) and save tax free.

Wondering what your ISA could be worth? Use our ISA calculator and stay on track the easy way.

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