Inheritance ISA/APS clarification and best providers?

Sallyforth

Hoping there may be some experts here who can help me with some questions on the above. My husband sadly passed away last month leaving a cash ISA worth c. £40 with Kent Reliance who do not accept inheritance ISA's unfortunately. I've done some research and as the Executor of his Will and sole beneficiary I know I am entitled to this money once I get the Probate documentation through. I have all the forms etc ready from Kent Reliance to close the account so just awaiting Probate which has already been granted (in record time!).

So my questions really are the following:

When the funds are transferred from KR to my current banking account I understand all I need to do is open an APS with a provider who offers this and ask them to contact KR to confirm the funds truly came from a closed ISA. Is that correct because I know there are rules surrounding ISAs and transfers etc but guess this is slightly different.

Can I simply open any cash ISA if the provider offers this facility e.g. find the best interest rate going and possibly fix?

Once the money is in an APS in my name am I then at liberty to transfer into a different ISA at any time to take advantage of better interest rates? Obviously I'm aware if I chose to fix this wouldn't be the case.

I really want to protect the tax free benefits of my late husband's ISA to prevent me paying more tax in future.

Hope that makes sense and any advice would be most welcome.

Thank you.

mazjohn108

Yes, you can open an APS with whatever provider you can find - I used Skipton - and they will indeed check with the Kent. Once you have the money in the APS you can then do an ISA transfer to wherever you want to put the money to gain a better rate. .

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82142147#Comment_82142147

Can you just not ask Skipton to organise the transfer, like you do with normal ISA transfers?

Or is that not possible from normal ISA to APS ISA ?

fuzzzzy

https://forums.moneysavingexpert.com/discussion/6683893/inheritance-isa-aps-clarification-and-best-providers

Yes you are correct in all you say. You will probably not find an APS ISA with a competitive interest rate, but as you say you can transfer to a better rate later. We also used Skipton a number of years ago for my mother when my father died and it was all relatively straightforward once we got our heads around the process.

Newly_retired

I think, like other ISA transfers, you need to get the banks to do the transfers, not do it via your current account, or it will lose its ISA status.

My husband’s ISA was with Lloyds, so I opened an APS ISA with Lloyds, then later had it transferred in the usual way into my own ISA with another bank at a better rate. There were forms to complete in branch ( Lloyds) .

fuzzzzy

https://forums.moneysavingexpert.com/discussion/comment/82142287#Comment_82142287

The APS process is not like other ISA transfers. The OP is correct in their thinking in their opening post.

They open an ISA with a provider who accepts APS. That provider will then contact Kent Reliance to confirm the APS. Then the provider will communicate with the OP to tell them how much they can pay in, and they can then pay in from whatever personal account they wish.

It likely seemed like the usual ISA transfer process in your case because both your husband's and the APS ISA were with the same provider.

fuzzzzy

https://forums.moneysavingexpert.com/discussion/comment/82142154#Comment_82142154

No, an APS ISA is one that allows Additional Permitted Subscriptions to the surviving spouse of an ISA holder who has died.

No actual ISA transfer takes place.

Even if the spouse does not actually inherit the funds and they go to someone else once the ISA has been closed, the spouse is still able to use the allowance, equal to the ISA 's value, in an APS ISA.

fuzzzzy

To the OP, just so there is no confusion, once you have all the allowed funds in the APS ISA in your name, then it becomes just like any other ISA and when you do want to transfer it on you do then have to use normal ISA transfer rules i.e. make a request to the new provider to do the transfer.

Sallyforth

Thank you so much for the replies which are very helpful and do clarify what I thought was the case with an inheritance ISA which I know 100% I am entitled to. It’s just a bit frustrating Kent Reliance don’t offer this option.

However I am a member of Skipton BS myself and I think one or two other Banks I have accounts with may offer this so all good.

Perhaps one for Martin to cover on his programme because I feel sure not everyone is au fait with this!

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82142406#Comment_82142406

Your understanding was correct as set out in Nat West's guidance below

https://www.natwest.com/savings/isa-overview/additonal_permittedsubscription.html

If you already bank with Nat West they are an alternative option to Skipton. If you don't you may find their new customer onboarding process a bit of a pain.

Newly_retired

https://forums.moneysavingexpert.com/discussion/comment/82142323#Comment_82142323

Thanks for the clarification.