Overpaid on Cash ISA

steviekins · 24 August 2015 at 4:42PM

Hi,

Hope someone can help with some advice as the more I look into this, the more confused I am. Opened a cash ISA in 2014 and maxed out of allowance. I recently accidentally made a payment into there of £900 and the building society accepted it and added it to the balance (plus the interest I'd already gained from 2014).

They say I need to contact HMRC and tell them about the extra and they will advise building society what to do.

I am sure I just don't understand it enough, but wouldn't it be better to open a second ISA for my 2015 allowance and then transfer everything that is above the 2014 limit out of the old one and put it into the new one? Thereby having two ISA's, one maxed out at last years limit and one I can invest more in this year?

If you have a cash ISA and don't need to draw it out, are you supposed to just allow the interest to grow and grow in there or take it out and put it elsewhere?

Very confused.

dzug1 · 24 August 2015 at 4:56PM

Yes you are confused - or at least your description of what happened is.

Assuming you made the £900 payment since 6 April, then there is nothing you need do as far as HMRC is concerned. It counts towards this year's allowance, not the 2014 allowance, and you can add to it.

So yes you already have two ISAs

jimjames · 24 August 2015 at 5:11PM

Dzug1 is correct, if you've not paid any money in since April then you've not broken any rules.

However are you aware that for £900 you can get vastly better interest rates outside of a cash ISA?

Archi_Bald · 24 August 2015 at 5:49PM

OP, you need to the date for your £900 deposit before anyone can conclusively comment.

Also, ISA allowances aren't per calendar year. You had a 2014-15 allowance, which covered the financial year 2014-15, i.e. April 6 2014 to April 5 2015.

Your current ISA allowance is for 2015-16, valid from April 6 2015 to April 5 2016.

steviekins · 25 August 2015 at 11:25AM

Hi guys,

Thanks for the replies, this makes a lot more sense now.

The original ISA was paid as a one off payment within the financial year 2014-2015. No other payments were made, it was maxed out right away. The £900 was paid just a month ago so was financial year 2015-2016. So from what you have all said there is no tax issue at all.

Also in terms of the comment that there are better ways to save £900, totally agree with this, unfortunately the payment was a mistake, was sent to the wrong bank account otherwise I would have put it elsewhere.

Thanks for the feedback, I can stop worrying now.

badger09 · 25 August 2015 at 4:50PM

steviekins wrote: »

Hi guys,

Also in terms of the comment that there are better ways to save £900, totally agree with this, unfortunately the payment was a mistake, was sent to the wrong bank account otherwise I would have put it elsewhere.

So why not withdraw the £900 an put it somewhere which pays higher interest?

And think about doing the same with your 2014/15 subscription?

Overpaid on Cash ISA

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