ISAs - Inherited extra ISA allowance (additional permitted subscription, APS)

When an ISA saver dies who was married or in a civil partnership, the surviving partner is entitled to an extra ISA allowance that is equal to their partner's ISA balance on the date they died.

This inherited extra allowance is called the additional permitted subscription (APS) allowance. It means that a deceased spouse can pass on their ISA "wrapper" with the tax advantages of saving into an ISA to their surviving partner. This allowance can then be used on top of their usual ISA allowance - which is £15,240 for the 2015/16 tax year. This inherited allowance is not dependant on the surviving spouse inheriting the actual money or investments held within the ISA.

Source: Clements, Lana. "New ISA Inheritance Rules Explained." Express. Northern and Shell Media Publications, 10 Apr. 2015. Web. 13 July 2015.

 

How to model an inherited extra ISA allowance (APS) in Voyant

For a surviving spouse or partner to inherit an ISA allowance (APS) in Voyant, the survivor must have an ISA in the plan to act as a container or wrapper in which to deposit funds.

This could be an existing ISA with funds on deposit at the start of the plan.

 

Or it could be a hypothetical future ISA with a zero balance at plan start.

 

In either case, this ISA must be owned by the survivor who must be the spouse or civil partner of the deceased in order to inherit their ISA allowance. Ownership is set in the People panel to the right side of the screen. 

To set an ISA to receive an inherited allowance (APS), go to the Spousal Allowance fields. 

Contribution £:  Specify the amount of the allowance that is to be received by the ISA. Enter 100% if the ISA is to receive the full inherited allowance. The allowance could be entered as a percentage or a specific monetary amount. 

Number of Years: Specify the number of years the inherited allowance will be used. Enter 1 if the entire allowance is to be used in the year of the spouse's or partner's death. A maximum of 3 years could be entered if this allowance is to be utilised over a three year period. 

The additional ISA allowance can be used for up to 3 years from the date of death or 180 days after the completion of the administration of the estate. Money can be paid in as a lump sum or in instalments (if allowed for by the provider).

With these settings in place, click Add or Update to save your changes. 

 

You can view the future deposit of funds upon death in the Let's See charts. 

    

The Spousal Allowance settings will create a planned contribution, effectively drawing funds from the deceased spouse's estate.

Below is the distribution of funds from the ISA, as shown on the Cash Flow tab of the chart details panel. 

 

Shown below is the amount contributed (the inherited ISA allowance plus any planned annual contributions) after expenses, as shown on the Expenses tab of the chart details panel. 

Like any scheduled contribution, deposits will only be made if funds are available. The actual ISA deposit could be less if the funds are needed to to pay other expenses.