The Help to Buy ISA closed to new accounts in November 2019. The accounts that already existed remain valid, continue to receive contributions up to the monthly cap, and continue to accrue the government's 25% bonus on closure — provided that closure is for a qualifying home purchase by the first-time-buyer holder. The scheme runs until November 2029, at which point the final eligible purchases must complete.
What is rarely explained is what happens to the account when the holder dies before that date.
The bonus does not pass to the estate
The Help to Buy bonus is contingent on the holder being a first-time buyer using the funds for a qualifying purchase. On death, neither condition can be satisfied. The bonus, in technical terms, was never earned — it was only ever a contingent claim. The estate inherits the cash deposits and the accrued interest, but not the 25% bonus that would have been payable on a qualifying purchase.
For a holder with the maximum £12,000 in contributions, this represents £3,000 of potential bonus that does not pass. For most holders, the figure is smaller — but it surprises families who had counted the bonus as part of the estate.
The APS inheritance
What does survive, and what most coverage misses, is the Additional Permitted Subscription (APS) allowance. Under rules introduced in the Finance Act 2017, a surviving spouse or civil partner inherits a one-off ISA subscription allowance equal to the value of the deceased's ISA holdings — including the Help to Buy ISA balance — at either the date of death or the date of account closure, whichever is higher. This allowance is in addition to the survivor's normal annual ISA limit.
The APS allowance must be used within three years of the date of death, or within 180 days of the estate's administration completing, whichever is later. It is held with the provider where the deceased's ISA was held, but can be transferred to another provider. The mechanic is straightforward; the awareness is low.
For an unmarried partner, no APS applies. The cash balance passes through the estate in the ordinary way and loses its tax-protected status.
What an executor should do
Three actions, quickly. Notify the provider of the death with a copy of the death certificate. Confirm whether the deceased was married or in a civil partnership at the date of death. Request both the balance valuation and, where applicable, the APS subscription pack for the surviving spouse. The pack is paper-heavy and lightly explained; reading it once is sufficient.
The Help to Buy ISA is a minor scheme in the broader landscape, but the APS rule applies to every ISA held by the deceased — cash ISAs, stocks and shares ISAs, innovative finance ISAs, and lifetime ISAs alike. An executor who learns the mechanic on the Help to Buy account preserves a substantial tax allowance for the spouse across the rest of the ISA portfolio.