What happens to an ISA when someone dies

Dealing with a loved one’s ISA after they die can feel confusing — especially because ISAs work differently from ordinary savings accounts, and there is a little-known allowance for surviving spouses and civil partners that many people miss entirely.

This guide covers everything an executor or surviving family member needs to know: what happens to the ISA tax wrapper on death, the APS (Additional Permitted Subscription) allowance for spouses, how different ISA types are handled, when you need probate, and what to do with NS&I.

The short answer

When someone dies, their ISA becomes part of their estate. The tax-free ISA wrapper does not automatically disappear — it continues to shelter the account from income tax and capital gains tax while the estate is being administered, for up to three years from the date of death. After that, the account is closed by the provider.

For a surviving spouse or civil partner, there is an important extra benefit: the APS (Additional Permitted Subscription) allowance. This lets you make a one-off contribution to your own ISA — over and above the normal annual limit — equal to the value your partner held in their ISA at death. This preserves the tax-free status of that money as it passes to you.

For anyone else — children, siblings, other beneficiaries — the ISA money forms part of the estate and is distributed through the normal estate administration process. There is no special tax-free treatment for non-spouses.

ISAs cannot be jointly held. Every ISA is in a single person’s name. There is no such thing as a joint ISA.

What is the APS (additional permitted subscription)?

The APS is the most important rule to know when a married person or civil partner dies with ISA savings. It was introduced in April 2015, and it means that the surviving spouse or civil partner can inherit the tax-free allowance — not just the money itself.

How it works

The APS gives you a one-off additional ISA allowance equal to the value of your deceased spouse’s ISA. You use this allowance by making a subscription into your own ISA — either at the same provider, or at a different one you choose.

The key point: you receive the allowance, not the tax wrapper itself. The money leaves the estate in the normal way. You then use the APS allowance to put an equivalent amount (which may or may not be the same money) into your own ISA, restoring the tax-free shelter.

For example: your spouse held £40,000 in an ISA at their death. You receive an APS allowance of £40,000. In that tax year and the next, you can subscribe up to £40,000 to your own ISA using this allowance — on top of your normal £20,000 annual limit. So in one year you could put in £60,000.

Eligibility

The deceased must have died on or after 3 December 2014
You must have been living together at the date of death — not separated under a court order, deed, or as a result of relationship breakdown
You must have been their spouse or civil partner (not an unmarried partner)

Time limits

Cash subscriptions: you have 3 years from the date of death to use the APS allowance (or 180 days after the completion of estate administration, if that is later)
In-specie transfers (where investments are transferred directly rather than sold): you have 180 days from the date beneficial ownership passes to you

Which provider to use

You can use the APS at the deceased’s ISA provider, or choose a different provider. If you choose a different provider, the allowance is transferred to them — you do not have to keep the money at the original institution.

Not all ISA providers are obliged to accept APS subscriptions. Check with your chosen provider before proceeding.

Source: gov.uk — Inheriting an ISA from your spouse or civil partner and gov.uk — Manage additional permitted subscriptions into an ISA (last verified March 2026)

ISA types at a glance

Different ISA types have slightly different rules on death. The table below summarises the key points:

ISA type	APS available for surviving spouse?	Tax wrapper on death	Key rule
Cash ISA	Yes	Continues (up to 3 years)	Interest earned after death is still sheltered while account remains a continuing ISA
Stocks and shares ISA	Yes	Continues (up to 3 years)	Provider can sell investments or transfer in specie to surviving spouse at same provider
Innovative Finance ISA	Yes	Continues (up to 3 years)	Peer-to-peer loans may take time to realise — check with provider
Lifetime ISA (LISA)	Yes	Ends on death; no withdrawal penalty	Government bonus stays with estate; no 25% withdrawal charge on death
Junior ISA (JISA)	N/A	Ends on death	Funds paid to child’s estate; if parent dies, JISA continues under new registered contact

Sources: gov.uk — If you die (ISAs) and gov.uk — Managing a Lifetime ISA when an investor dies (last verified March 2026)

Cash ISAs when someone dies

When someone dies with a cash ISA, the account does not immediately lose its tax-free status. For deaths on or after 6 April 2018, the ISA becomes a continuing account of a deceased investor. It remains sheltered from income tax and capital gains tax until whichever comes first:

The executor closes the account
Estate administration completes
Three years and one day from the date of death

During this period, interest earned inside the account remains tax-free. No new deposits can be made.

What the executor needs to do

To close a cash ISA and release funds, you will need to contact the ISA provider’s bereavement team. You will typically need:

The original death certificate (or certified copy — check the provider’s requirements)
Proof of your identity as executor or administrator
A grant of probate or letters of administration (if the estate requires it — see below)
The account number or provider details

The funds are then paid to the estate and distributed according to the will (or intestacy rules).

Do you need probate for a cash ISA?

ISA providers set their own thresholds. Many follow similar rules to banks — releasing funds up to a certain amount without probate, requiring a grant above it. Contact the specific provider to confirm their current threshold and process.

Stocks and shares ISAs when someone dies

The same tax wrapper rules apply: for deaths on or after 6 April 2018, the account becomes a continuing ISA and retains its tax-free status during administration.

For the executor, there are two options with the investments:

Sell the investments and pay the proceeds into the estate — the provider liquidates the holdings and transfers the cash
Transfer in specie (transfer the investments themselves) to a surviving spouse’s or civil partner’s ISA — but only if both the deceased and the surviving spouse used the same provider

The in-specie option is often not widely advertised. If the surviving spouse holds an ISA at the same provider as the deceased, it is worth asking whether this is available. It avoids the need to sell and repurchase investments, which can trigger timing risk and transaction costs.

If the surviving spouse is at a different provider, the investments are sold, and the cash can be used (along with the APS allowance) to repurchase equivalent investments in the survivor’s ISA.

Lifetime ISA (LISA) when someone dies

The Lifetime ISA has specific death rules that are worth understanding separately, because the LISA’s government bonus element can cause confusion.

When a LISA holder dies:

The ISA ends on the date of death
There is no 25% withdrawal penalty — the penalty that normally applies to non-qualifying withdrawals does not apply on death
The government bonus that accrued on contributions made up to and including the date of death stays with the estate — the estate receives it
Any bonus claimed on contributions made after the date of death must be repaid to HMRC (though this is charge-free if the provider was unaware of the death)
All funds, including accumulated bonuses and interest, pass to the estate without penalty — but the money loses its tax-free ISA status and forms part of the estate for inheritance tax purposes

The APS allowance is available to a surviving spouse or civil partner for a LISA, as with other ISA types.

Source: gov.uk — Managing a Lifetime ISA when an investor dies or is terminally ill (last verified March 2026)

Junior ISA (JISA) when someone dies

JISAs are held in a child’s name, and the rules differ depending on who has died.

If the child dies

If the child who holds the JISA dies, the money in the JISA is paid to whoever inherits their estate — usually one or both parents, though if the child was 16 or over and married or in a civil partnership, it would pass to their spouse or partner.

Any income or gains earned inside the JISA after the date of death (up to account closure) are not exempt from tax.

You do not need to notify HMRC, but you must tell the JISA provider so they can close the account. They will typically require a death certificate.

If the registered contact (usually a parent) dies

The JISA itself continues — it belongs to the child, and the parent’s death does not affect the underlying account.

If the child is 16 or over, they can take over management of the account themselves
If the child is under 16, their new legal guardian can apply to become the registered contact by contacting the provider and providing the death certificate

Source: gov.uk — Junior ISAs: if your child is terminally ill or dies (last verified March 2026)

NS&I ISAs: the low probate threshold to know about

National Savings and Investments (NS&I) has one rule that catches many executors off guard: its probate threshold is just £5,000 across all NS&I products combined.

This is far lower than most banks and building societies (which typically set thresholds of £25,000–£50,000). So if the deceased held an NS&I cash ISA, even a modest balance may require a grant of probate before NS&I will release the funds — if their total NS&I holdings (including Premium Bonds, savings accounts, and ISAs) exceed £5,000.

NS&I also reserves the right to ask for a grant of representation for savings of any value.

If the surviving spouse wants to use their APS allowance at NS&I, the provider has a specific process — including a dedicated Additional Permitted Subscription transfer authority form.

If the deceased also held Premium Bonds, the same £5,000 threshold applies and the bonds have their own rules — including a 12-month prize draw window after death. See what happens to Premium Bonds when someone dies for the full detail.

Source: NS&I — Inheriting savings and NS&I — What to do if an NS&I customer has died (last verified March 2026)

Do ISAs form part of the estate for inheritance tax?

Yes. ISAs do not have any special inheritance tax exemption. When someone dies, the value of their ISA forms part of their estate and is included in the IHT calculation.

The normal IHT rules apply:

The nil rate band is £325,000 (as at 2025–26) — estates below this pay no IHT (gov.uk — Inheritance Tax, last verified March 2026)
The spousal exemption means assets passing to a surviving spouse or civil partner are exempt from IHT entirely — including ISA funds
For other beneficiaries, any ISA value above the available nil rate band is subject to IHT at 40%

So while the ISA wrapper preserves tax-free growth during your lifetime, it provides no IHT shelter. A £100,000 ISA passing to a child forms part of the estate just like any other asset.

What this means in practice: a surviving spouse or civil partner inheriting an ISA pays no inheritance tax on it (spousal exemption), and then uses the APS allowance to keep the money in a tax-free wrapper in their own name. This is the most tax-efficient outcome possible. For other beneficiaries, the money is subject to IHT and then loses its ISA wrapper — there is no way to transfer the tax-free status to them.

Step-by-step: what to do as an executor

If you are dealing with someone’s ISA as executor or administrator, here is a practical sequence:

Find all ISA accounts — check bank statements, annual statements, and any ISA provider correspondence. ISA providers include high street banks, building societies, investment platforms, and NS&I.
Register the death and obtain death certificates — you will need multiple certified copies. Most ISA providers will require at least one.
Notify each ISA provider — contact their bereavement team. You can use the Death Notification Service for banks and building societies that are members, but check whether each ISA provider is covered. Some investment platforms are not.
Check whether the surviving spouse wants to use the APS — they have up to 3 years from the date of death (for cash subscriptions). Inform the surviving spouse of the allowance and the deadline so they do not miss it.
Establish whether probate is needed — ask each provider for their threshold. NS&I requires a grant if total NS&I savings exceed £5,000. Other providers vary — typically £25,000–£50,000. For more on the probate process, see how long does probate take?
Request closure and release of funds — provide the death certificate, your proof of identity as executor, and (if required) the grant of probate. Funds are paid to the estate.
Distribute according to the will or intestacy rules — the money is treated like any other estate asset from this point.

Common questions

Do I pay inheritance tax on my spouse’s ISA?

No. Assets passing from one spouse or civil partner to the other are exempt from inheritance tax under the spousal exemption. This applies regardless of value. gov.uk — Inheritance Tax: exemptions and reliefs (last verified March 2026)

Can I keep my spouse’s ISA in their name?

No. An ISA cannot be held in the name of a deceased person indefinitely. The account becomes a continuing account of a deceased investor and the provider will close it after 3 years and 1 day if the executor has not already done so. You cannot take over ownership of someone else’s ISA — but you can use the APS allowance to replicate the tax-free shelter in your own name.

How long does it take to close an ISA after a death?

For a straightforward cash ISA below the provider’s probate threshold, closure typically takes a few weeks once all documents are received. If probate is required, the timeline is tied to how long the probate process takes — typically 4–8 weeks for a straightforward grant, sometimes longer. See how long does probate take? for full timelines.

What if my spouse’s ISA was with a provider I don’t use?

You do not have to use the deceased’s ISA provider to claim your APS allowance. You can choose any ISA provider who accepts APS subscriptions and use your allowance there. Ask the deceased’s provider to transfer the APS authority to your chosen provider.

Are ISA funds included in the estate for probate valuation?

Yes. ISA balances are included in the gross estate value when establishing whether probate is required and for inheritance tax purposes. Even though the ISA wrapper provides income and CGT benefits during lifetime, it does not affect how the funds are treated for estate valuation.

What happens to a bank account when someone dies — frozen accounts, probate thresholds, joint accounts, and how to notify banks
What happens to savings accounts when someone dies — sole and joint savings accounts, NS&I threshold, FSCS protection, and the claims process
What happens to a pension when someone dies — pensions usually bypass probate and have different death benefit rules
How long does probate take? — full timeline from application to estate distribution
Notifying NS&I after a death — step-by-step guide for Premium Bonds, savings accounts, and ISAs held with NS&I