Last reviewed: September 2026 Individual Savings Accounts, commonly known as ISAs, are a popular way to save or invest tax efficiently. During a person's lifetime, income and gains within an ISA are usually free from Income Tax and Capital Gains Tax. However, many people are unsure what happens to an ISA when the account holder dies. Does the ISA close automatically? Does it pass to a spouse or civil partner? Is it included in the estate for Inheritance Tax? Do executors need probate before the ISA provider will release the money? The answer depends on the type of ISA, the value of the account, who inherits under the will or intestacy rules, and the requirements of the ISA provider. This guide explains what happens to an ISA after death, how ISAs are treated during probate, and what surviving spouses or civil partners need to know about inherited ISA allowances.
An ISA does not necessarily lose its tax-free status immediately when the account holder dies.
For deaths on or after 6 April 2018, an adult ISA can become a “continuing account of a deceased investor”. This means that the ISA can continue to benefit from its tax advantages for a limited period after death. During this period, income and gains within the ISA are usually protected from Income Tax and Capital Gains Tax.
The ISA will end on the earliest of the executor closing it, the completion of the administration of the estate, or three years and one day from the date of death. If the ISA has not been closed before that long-stop date, the provider will usually close it or remove the ISA wrapper.
No new payments should be made into the deceased person's ISA after death. The account is no longer operated as a normal ISA for the deceased investor, even though the tax wrapper may continue temporarily.
Yes. An ISA forms part of the deceased person's estate for Inheritance Tax purposes.
This is a common area of confusion. ISAs are tax-efficient during lifetime, but they are not automatically outside the estate when someone dies. The value of the ISA must usually be included when calculating the value of the estate.
If the estate is below the available Inheritance Tax thresholds, there may be no IHT to pay. If the estate passes to a spouse or civil partner, the spouse or civil partner exemption may apply.
However, where an ISA passes to children, relatives, friends or other beneficiaries, its value may contribute to the taxable estate.
There is one important exception to consider. Some stocks and shares ISAs may contain qualifying business assets, such as certain unlisted or AIM shares.
These may qualify for Business Property Relief, depending on the assets and the conditions at the date of death. From 6 April 2026, shares traded on markets such as AIM generally qualify for Business Property Relief at 50% rather than 100%, so specialist advice should be taken where an ISA contains these types of investments.
Executors should therefore include the ISA when valuing the estate and preparing probate or Inheritance Tax information.
An ISA does not pass according to the ISA wrapper itself. The underlying money or investments pass according to the deceased person's will or, if there is no valid will, under the rules of intestacy.
If the deceased left a will, the ISA proceeds will usually pass to the beneficiaries named in the will, either specifically or as part of the residuary estate. If there is no will, the ISA will be distributed according to the intestacy rules.
This means an ISA does not automatically pass to a spouse, civil partner or child unless they are entitled under the will or intestacy rules.
It is also important to distinguish between inheriting the ISA assets and inheriting an additional ISA allowance. A surviving spouse or civil partner may be entitled to an additional ISA allowance even if they do not inherit the ISA assets themselves.
A surviving spouse or civil partner may be able to inherit an additional ISA allowance known as an Additional Permitted Subscription, often shortened to APS.
This allows the surviving spouse or civil partner to pay an additional amount into their own ISA, on top of their normal annual ISA allowance. The current overall annual ISA allowance is £20,000, although ISA rules and product limits can change over time.
The APS is not the same as automatically inheriting the ISA money. It is an additional tax-free ISA allowance. The surviving spouse or civil partner may still need to receive the ISA assets under the will or intestacy rules, or use their own funds, depending on the circumstances.
For example, if a deceased person had £80,000 in ISAs, their surviving spouse or civil partner may be able to use an additional ISA allowance linked to that value. This can allow them to shelter inherited funds, or other available cash, within their own ISA without using up their normal annual allowance.
The APS allowance is available to a surviving spouse or civil partner, but there are conditions.
The surviving spouse or civil partner must have been living with the deceased at the date of death. They will not usually qualify if they were separated under a court order, separated under a deed of separation, or separated in circumstances where the separation was likely to become permanent.
However, separation because one spouse or civil partner was living in a care home does not automatically prevent APS eligibility. The key issue is whether the couple were separated in a legal or permanent relationship breakdown sense, rather than physically living in different places for care or health reasons.
APS is available whether or not the surviving spouse or civil partner actually inherits the ISA assets. This is a useful point because the ISA money may pass to other beneficiaries under the will, but the surviving spouse or civil partner may still be able to claim the additional ISA allowance.
For deaths on or after 6 April 2018, the APS allowance is based on the higher of two values.
The first is the value of the deceased person's ISA at the date of death. The second is the value of the ISA when it ceases to be a continuing account of a deceased investor.
This is important where investments rise or fall in value during the estate administration period. If the ISA grows before it is closed, the surviving spouse or civil partner may be able to benefit from the higher value for APS purposes.
Where the deceased held ISAs with more than one provider, the APS position should be checked with each provider. The surviving spouse or civil partner should also confirm whether their chosen ISA provider accepts APS subscriptions, as providers are not required to do so.
The time limits depend on whether the APS is made in cash or by transferring investments directly.
Cash APS subscriptions must usually be made within three years of the date of death. If the administration of the estate takes longer than three years, the cash subscription can instead be made within 180 days of the completion of the estate administration, if that is later.
In specie transfers, where inherited non-cash ISA assets are transferred directly into the surviving spouse or civil partner's ISA without being sold first, must be made within 180 days of beneficial ownership passing to the survivor.
An in specie transfer can only be made with the ISA provider that holds the assets. If the surviving spouse or civil partner wants to use a different ISA provider, the APS will usually need to be made in cash rather than by transferring the investments directly.
These time limits are important. If they are missed, the surviving spouse or civil partner may lose the opportunity to use the APS allowance.
A spouse or civil partner may be able to preserve the tax-efficient position by using the APS rules.
The surviving spouse or civil partner may be able to make the additional subscription with the provider who held the deceased's ISA or with another provider that accepts APS subscriptions. However, not all providers are required to accept APS payments, so it is important to check the process early.
In some cases, stocks and shares ISA investments may be transferred directly to a surviving spouse or civil partner's ISA. This is only possible where the relevant requirements are met, where the spouse or civil partner inherits the assets, and where the transfer is made within the required time limit.
The APS rules can be valuable, but they are separate from the inheritance itself. Executors and surviving spouses or civil partners should therefore check both the estate distribution position and the ISA subscription rules.
A Cash ISA will usually remain with the ISA provider until the account is closed or the funds are released to the personal representatives or beneficiaries.
Once the provider is notified of the death, they will usually restrict the account and request documents. They may ask for a death certificate, identification from the person dealing with the estate, a copy of the will and, depending on the value, a Grant of Probate or Letters of Administration.
Interest arising within the continuing ISA during the permitted period is usually tax-free. Once the ISA is closed and funds are paid out to the estate or beneficiaries, any later income will need to be considered under the normal tax rules.
Executors should request the date of death balance and any interest details so the ISA can be included correctly in the estate valuation and estate accounts.
A stocks and shares ISA can be more complex because the account may contain investments that rise or fall in value after death.
The ISA provider may be instructed to sell the investments and pay the proceeds to the estate or beneficiaries. In some cases, investments may be transferred directly, including to a surviving spouse or civil partner's ISA where the APS rules are met.
Executors should take care before selling or transferring investments. They may need to consider the will, the needs of the estate, market movements, tax reporting and whether the beneficiaries are due to receive cash or specific investments.
The value at the date of death is important for estate and Inheritance Tax purposes. The value when the ISA ceases to be a continuing account may also matter for the surviving spouse or civil partner's APS allowance.
Where the ISA contains investments, executors should keep clear records of valuations, sale proceeds, charges and any income or gains during the administration period.
A Lifetime ISA can also continue as a continuing account of a deceased investor after death.
If government bonuses were due on payments made on or before the date of death, these may still be claimed by the provider and paid to the estate when the Lifetime ISA is closed. However, no further payments should be accepted after death, and any bonuses incorrectly claimed on payments made after death must be withdrawn and repaid.
The 25% government withdrawal charge does not apply where the withdrawal is made because of the death of the Lifetime ISA investor.
The value of a Lifetime ISA also counts towards the surviving spouse or civil partner's APS allowance. This includes any government bonus accrued but not yet paid on the account.
Lifetime ISAs have specific rules, and the Government has consulted on a new First Time Buyer ISA product to be offered in place of the Lifetime ISA once available. Existing Lifetime ISA holders may continue under the current rules, but this is an area where future changes should be monitored.
As with other ISAs, the value of the Lifetime ISA will usually form part of the estate for Inheritance Tax purposes.
Junior ISAs should be considered separately from adult ISAs.
A Junior ISA does not become a continuing account of a deceased investor in the same way as an adult ISA. The ISA wrapper ends at death, and the money in the Junior ISA will be paid to whoever inherits the child's estate.
The provider will usually need to be notified of the death and may require evidence such as a death certificate. Depending on the circumstances, the funds may pass to a parent, spouse, civil partner or another person entitled under the estate.
Executors or family members should contact the Junior ISA provider directly and check what documentation is required.
Probate may be required to close or transfer an ISA, but this depends on the provider and the value of the account.
Some ISA providers may release smaller amounts without a Grant of Probate or Letters of Administration. Others will require formal legal authority before they will close the account or transfer the investments.
Where probate is required and there is a valid will, the executors apply for a Grant of Probate. Where there is no valid will, an eligible person applies for Letters of Administration.
The provider will usually explain what documents are needed. Executors should ask for this in writing where possible and should ensure that the ISA is included when valuing the estate.
Beneficiaries do not usually have the right to deal directly with the deceased person's ISA unless the provider is satisfied that they are entitled and all required documents have been provided.
The executor or administrator is responsible for collecting estate assets, paying debts and tax, preparing estate accounts and distributing the estate correctly.
Even if a beneficiary is due to inherit the ISA proceeds, the funds may need to pass through the estate administration process first. This is especially likely where probate is needed, Inheritance Tax must be considered, or there are debts and expenses to pay.
Executors should avoid distributing ISA funds too early. If further liabilities later arise, the personal representatives may be responsible for ensuring the estate can meet them.
If there is no valid will, the ISA will pass under the rules of intestacy.
These rules set out who inherits in a fixed legal order. A spouse or civil partner may inherit all or part of the estate, depending on whether there are children and the value of the estate. Children and other relatives may also be entitled.
Unmarried partners do not automatically inherit under the intestacy rules, even if they lived with the deceased for many years. This can be particularly important where the deceased expected their partner to benefit from their savings but did not make a will.
Where there is no will, an eligible person may need to apply for Letters of Administration before the ISA provider will release funds.
Executors should start by identifying all ISAs held by the deceased. This may include Cash ISAs, stocks and shares ISAs, Lifetime ISAs, Innovative Finance ISAs and, where relevant, Junior ISAs.
They should notify each provider of the death, request the date of death value and ask what documents are required.
They should also ask whether the account is being treated as a continuing account of a deceased investor and whether probate will be needed.
If there is a surviving spouse or civil partner, the executors should also ask about the APS value and what information the provider can supply. The spouse or civil partner may then decide whether and how to use that additional ISA allowance.
Executors should keep clear records of valuations, correspondence, account closures, investment sales, interest, dividends, charges and distributions. These records will be needed for estate accounts and may be needed for tax reporting.
One common mistake is assuming that ISAs are free from Inheritance Tax. They are usually tax-free for Income Tax and Capital Gains Tax during lifetime, but they still form part of the estate for IHT purposes.
Another mistake is assuming that a spouse or civil partner automatically receives the ISA itself. The spouse or civil partner may receive an additional ISA allowance, but the ISA assets pass under the will or intestacy rules.
Some families also overlook the APS allowance or miss the time limits for using it. This can mean a surviving spouse or civil partner loses the opportunity to preserve tax-free savings or investments.
Executors may also delay notifying the provider or fail to request the right values. This can make estate valuation, tax reporting and administration more difficult.
Finally, investment ISAs should not be sold or transferred without considering the will, the beneficiaries, APS rules and the wider estate position.
When someone dies, their adult ISA does not necessarily lose its tax-free status immediately. For deaths on or after 6 April 2018, it can usually continue as a continuing account of a deceased investor until the earliest of the executor closing it, the completion of the estate administration, or three years and one day from the date of death.
However, the ISA still forms part of the estate for Inheritance Tax purposes. It must be valued, reported where required and dealt with as part of the wider estate administration process.
A surviving spouse or civil partner may also be able to use an Additional Permitted Subscription, allowing them to add an extra amount to their own ISA without using their normal annual ISA allowance. This can be valuable, but it is separate from inheriting the ISA assets themselves and is subject to eligibility conditions and time limits.
If you are dealing with an ISA after someone has died, Premier Solicitors can help you understand whether probate is required, how the ISA should be valued and how the estate should be administered.
At Premier Solicitors, our probate and estate administration team provides clear, practical support to executors, administrators, beneficiaries and families.
We can help identify and value ISA accounts, contact ISA providers, advise on probate requirements, prepare and submit probate applications, deal with Inheritance Tax reporting and guide you through the full estate administration process.
We can also advise surviving spouses and civil partners on the probate and estate administration steps connected with inherited ISA assets and additional ISA allowances.
For tailored advice on ISAs, probate and estate administration, contact Premier Solicitors today.
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