What are Additional Permitted Subscriptions?

August 21, 2019

Making sure you know what is permitted for your financial planning is what working with an experienced IFA is all about. So knowing the detail of financial legislation is vital for financial planning. It would seem that currently thousands of bereaved people are missing out on Additional Permitted ISA subscriptions.

What are Additional Permitted Subscriptions?

But what are Additional Permitted Subscriptions? Back in 2015 when the government changed the rules on ISAs, it became the case that when one partner died, the surviving partner could increase their ISA allowance. Essentially this would allow them to inherit the money from their partners ISA without having to pay any tax.

It became the case that if your partner died, you could apply for an additional permitted subscription (APS). If they died before 6th April 2018, then the APS would be equal to the value of the ISA on the day that person died eg if your partner passed away and had an ISA valued at £25,000 that would be your APS. This is how much extra you can enjoy in tax-free savings, beyond your own personal allowance.

As with most financial legislation, however, there is often a sliding scale of adjustment. So if your partner died after 6th April 2018, things are slightly different in this case their ISA will become a ‘continuing ISA’. This means that the gains from the ISA will also be tax-free until one of the following happens: the administration of the estate concludes the closure of the ISA or the third anniversary of the death of the saver. However, very few people are taking advantage of this allowance.

Alistair Wilson, head of retail platform strategy at Zurich, described the take-up of the APS tax break as “shockingly low”, and he isn’t wrong. According to Freedom of Information data obtained by Zurich, a paltry 21,000 used the APS to inherit their spouse’s ISA balance in the 2017/18 tax year. Enable’s IFAs can help you navigate tax legislation and your financial planning.


< Back