Scope: UK-wide. ISA, APS, and FSCS rules apply across England, Wales, Scotland, and Northern Ireland. Rates and provider features reflect January 2026 market conditions.
TL;DR
- The “best” Cash ISA for estate planning is not just about rates.
- APS compatibility and easy transfers matter more than headline interest.
- Inherited ISAs can fall into low-rate traps (1.5%–1.75%) if unmanaged.
- FSCS protection is £120,000 per person, per bank (since Dec 2025).
- A well-chosen Cash ISA can preserve six figures of tax-free savings for a spouse.
What Makes a Cash ISA “Good” for Estate Planning?
For inheritance and later-life planning, a Cash ISA must do four things well:
- Support APS properly (including aggregation from multiple providers)
- Allow easy ISA transfers without friction
- Pay a competitive rate once APS funds are moved
- Sit under strong FSCS protection
A top-paying ISA that mishandles APS can cost more in lost tax shelter than it earns in interest.
The APS Compatibility Test (Non-Negotiable)
If a provider fails any of the following, it is not estate-planning friendly:
- Accepts Additional Permitted Subscription (APS)
- Allows APS aggregation from multiple providers
- Supports ISA Transfer Service without withdrawals
- Does not force money to remain in a low-rate APS holding account
Advisor insight:
APS functionality is rarely advertised clearly. You often need to confirm it before opening the account.
Best Cash ISA Types for Estate Planning
Easy-Access Cash ISAs
Best for:
- Older savers
- Widows / widowers using APS
- Estates needing flexibility
Pros:
- No lock-in
- Easy transfers
- Suitable for large inherited balances
Cons:
- Rates can change
Fixed-Rate Cash ISAs
Best for:
- Long-term estate parking
- Savers with no withdrawal needs
Pros:
- Predictable returns
- Useful for “set and forget” planning
Cons:
- Early exit penalties
- Less flexibility during estate administration
2026 Rate Warning: The APS Holding Account Trap
Never assume the default APS rate is competitive.
In early 2026, several major providers — including Nationwide and West Bromwich Building Society — paid as little as 1.5%–1.75% on inherited APS ISAs.
Key rule:
Once your APS allowance is confirmed, you are free to transfer it to a top-paying Cash ISA (often 4%+) using the ISA Transfer Service.
Leaving money in a default APS account is one of the most expensive inheritance mistakes.
Best Cash ISA Providers for Estate Planning (January 2026)
These are mainstream providers known for smoother ISA transfers and APS handling. Rates change, but process quality matters more than decimals.
Easy-Access (APS-Friendly)
- Trading 212 – competitive easy access, strong transfer support
- Leeds Building Society – conservative but inheritance-friendly
- Skipton Building Society – well-regarded for ISA admin
Fixed-Rate (For Long-Term Estates)
- Cynergy Bank – strong fixed-rate ISA options
- Charter Savings Bank – competitive fixed terms, simple structure
Always confirm:
- APS acceptance
- Transfer timelines
- Early access rules
FSCS Protection (Updated 2026)
All recommended providers must fall under the Financial Services Compensation Scheme (FSCS).
Since 1 December 2025:
- £120,000 per person, per institution
- £240,000 for joint accounts
Estate planning note:
This allows large inherited sums to be held securely without unnecessary bank-hopping.
Example: APS + Estate-Friendly ISA in Practice
Scenario:
- Inherited ISA value: £100,000
- Survivor aged 62
- April 2027 allowance cut applies
Outcome:
- APS allows the full £100,000 to be sheltered
- The £12,000 annual ISA cap does not apply
- Funds can be transferred into a competitive Cash ISA
- All future interest remains tax-free
This is one of the few legal ways to bypass future ISA allowance cuts.
The Continuing ISA Rule (Why There’s No Rush)
When someone dies, their ISA becomes a Continuing ISA.
This means:
- Tax-free interest continues
- For up to 3 years, or until estate closure
This gives survivors time to:
- Compare providers
- Avoid low-rate traps
- Use APS strategically
Rushing usually costs money.
Common Estate-Planning ISA Mistakes
- Leaving money in a low-rate APS holding account
- Withdrawing ISA funds instead of transferring
- Missing APS deadlines
- Assuming APS is automatic
- Multiple providers confusion:
If the deceased had ISAs with three banks, the survivor gets three APS allowances.
These can be aggregated at one provider — but only if requested.
Is This Financially Worth It?
- £20k–£50k estates: Still meaningful
- £50k–£150k: High-impact tax protection
- £150k+: Often the largest single tax decision survivors make
The risk is not volatility — it is administrative inertia.
People Also Ask (PAA) & FAQs
What is the best Cash ISA for estate planning?
One that supports APS fully, allows easy transfers, and pays a competitive rate after inheritance.
Can inherited ISAs be moved?
Yes, using the ISA Transfer Service once APS is confirmed.
Are APS ISAs protected by FSCS?
Yes, up to £120,000 per person, per bank.
Do I lose tax protection if I move the money?
Only if you withdraw it. Transfers keep protection intact.
Can all APS allowances be used at one bank?
Yes, but the receiving bank must agree to aggregate them.
Is professional advice required?
Not required, but complex estates often benefit from specialist guidance.
Choosing the right Cash ISA for estate planning only makes sense once the rules behind it are clear. If you are comparing options, start with cash ISA vs savings account for retirees to understand why tax treatment matters more than headline rates. To see why 2026 is such a critical year, the ISA allowance cut explained April 2027 shows how future limits restrict flexibility for many savers. For spouses and estate planning, how ISA inheritance works (APS guide) explains how inherited ISAs can remain tax-free and why provider choice is crucial. Read together, these guides ensure estate-focused ISA decisions are informed, compliant, and future-proof.
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How ISA Inheritance Works (APS Guide – UK 2026)
