Death & Taxes: Why is the additional permitted subscription so often overlooked?

By Lora Benson | Feb 20, 2019
Have ISAs lost their appeal or are surviving spouses simply unaware of the opportunity to take advantage of their deceased partners APS?

According to HMRC, the number of individuals subscribing to ISAs has been in steady decline since peaking at 15.2m in 2010-11. Indeed, it’s estimated to be as low as 10.8m in 2017-18 - a 29% reduction over just 7 years. The fall has been driven by fewer individuals contributing to cash ISAs. There is no doubt that the introduction of the personal savings allowance in April 2016 and the poor rates of interest being offered make ISAs unattractive for many, so using the additional permitted subscription (APS) may simply be of no appeal.

However, where there are individuals who are not advised, it could be a case that they are simply not aware of the availability of the APS or how it actually works.

For example, the ability to make use of the APS does not have to mean the transfer of the cash or stocks and shares from the deceased’s ISA to the surviving spouse or civil partner. One of the questions raised with me recently was where the deceased had created and left his full estate to an immediate post death interest trust in his will. It came as a surprise to the surviving spouse that she could still use all, or part of the APS generated by her late husband when funding her own ISA.

What is worrying is that surviving spouses/civil partners may be missing out on a valuable tax planning opportunity and, whilst we and other platforms do provide information on and bring attention to the APS, maybe more is required.

Read more about this subject here

Please note that every care has been taken to ensure that the information provided in this article is correct and in accordance with our understanding of current law and HM Revenue & Customs practice, which is subject to change. The tax treatment depends on the individual circumstances of each client.

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James Hay Partnership, the platform for retirement wealth planning, has been working with financial advisers and clients for over 30 years to administer pensions, savings and investments in a cost and tax efficient way. Today over 50,000* clients trust us to look after more than £16 billion* worth of pension and investment savings.

From the very first day we have challenged industry norms as we've responded to changing client needs - from being the first SIPP provider in the UK, through to developing our modular approach to retirement wealth planning, which we launched in 2013.

The Modular iSIPP embraces fair and flexible pricing meaning the customer only pays for what they use, while they use it. This has now been evolved through the Modular iPlan to include other non-pension wrappers such as GIAs and ISAs.

We are able to continue to innovate thanks to being part of the IFG Group, a focused financial services company specialising in the provision of independent financial advisory and administrative services.

IFG Group plc is listed on the Irish and London Stock Exchanges. *as at March 2018