In the 2014 Autumn Statement it was announced that ISA allowances could be passed on to surviving spouses/ civil partners when a saver dies. Under the old rules, if a saver with an ISA died, the tax benefits fall away on death and the holdings are added to his/ her estate.
The new rules came into effect on the 6th April 2015 and gave the surviving spouse/ civil partner an "additional permitted subscription", a one-off ISA allowance, equal to the value of the deceased’s ISA holdings.
Where a person holding an ISA dies from 6 April 2018, the tax advantages of the ISA are extended until broadly three years from the date of death which impacts the calculation of the "additional permitted subscription" allowance.
A consumer leaflet, prepared jointly by the BSA, TISA and UK Finance, providing further information can be found here.