Subscribed to more than one ISA, what should I do?

tristan888

Hi there

In mid April I subscribed some money into my Halifax cash ISA. A few months later I opened a new cash ISA with Alliance and Leicester and have started subscribing regularly to this ISA. I have just realised that I have breached ISA rules in that I have subscribed money to more than one cash ISA in the same tax year. Which of these ISAs will lose its tax-free status? Is there anything that can be done to prevent this? What is the best action to take?

Thanks

dunstonh

Which of these ISAs will lose its tax-free status?

The A&L one as its the second one. You should let A&L know straight away that you were not eligible to pay into that one so they can void it.

The HMRC allow one error per NI number without taking action (providing you dont exceed limits) so you could use that get out of jail free card and do nothing. It really depends on whether you want to use that "card" up with this mistake.

tristan888

Ah cheers, is it worth contacting HMRC to let them know the mistake I have made?
When you say "providing you dont exceed limits" are you referring to the £3,600 cash ISA subscription limit for the tax year?

I have contacted A&L and they also said my A&L ISA would get affected. They also said I could withdraw the sum of money I subscribed to my Halifax ISA to prevent my A&L ISA losing its tax-free status. But I will probably leave it and use up my one error allowance.

tristan888

http://www.hmrc.gov.uk/leaflets/isa-factsheet.htm says:

Duplication

Remember you cannot invest in more than one cash ISA, or more than one stocks and shares ISA in the same tax year.
Mistakes do happen. If you do invest in more than one ISA of the same type in a tax year, the second ISA will not be tax-advantaged.
If this has happened call our ISA helpline. Have the details of your ISA accounts to hand when you call.

Looks like I'd better contact them then!

carpy

any up to date info regarding this?

anyone done this and phoned up? what do they say you need to do?

just realised i subscribed to 2 ISA's back in April for this current tax year, £2k in one and £1.6k in the other so i haven't gone over £3.6k but obviously it shouldn't be split between more than one ISA!!!

it's getting on for a year and haven't heard anything so am tempted to just leave things but i guess they'll (HMRC) will catch up with me eventually.

how i see it is i've still only invested £3.6k so it's not like i'm gaining more of a tax advantage than i should but i guess that holds no water!!

what have others done it this situation?

if you're allowed one mistake is there a chance they'll just let it go if they notice??

jimbow25

I remember reading a post on her once before - someone called HMRC because they'd done this by mistake and were told basically they were right to report it but just don't do it again, but they didn't actually force them to pay tax or void the ISA - I guess there's no guarantee they'd be as nice to everyone though.

glider3560

jimbow25 wrote: »

I remember reading a post on her once before - someone called HMRC because they'd done this by mistake and were told basically they were right to report it but just don't do it again, but they didn't actually force them to pay tax or void the ISA - I guess there's no guarantee they'd be as nice to everyone though.

I think it is pretty standard, provided you come clean as soon as you realise (i.e. within the tax year). My understanding is most people just get a simple slap on the wrist "don't do it again". ISA isn't voided and no tax payment requested.

Lokolo

jimbow25 wrote: »

I remember reading a post on her once before - someone called HMRC because they'd done this by mistake and were told basically they were right to report it but just don't do it again, but they didn't actually force them to pay tax or void the ISA - I guess there's no guarantee they'd be as nice to everyone though.

^^ exactly as that. Be nice on the phone

nelsons_column

Now here's a question on a related subject -

can you open 2 ISAs in the same tax year, but not pay into the second one?

Reason I ask is that this new A & L ISA at 3.5% looks pretty good. I'd like to open it asap before they stop this offer, but already have a natwest ISA open (and have paid the maximum £3600 this tax year).

Is there any problem with me opening this 2nd ISA but not paying into it until April? (Or is this offer likely to be continuing up until April anyway?)

Ta for any advice
Mike

Baldur

nelsons_column wrote: »

can you open 2 ISAs in the same tax year, but not pay into the second one?

You can open as many Cash ISA accounts as you like but you can only subscribe to one per tax year.

Is there any problem with me opening this 2nd ISA but not paying into it until April?

You'd need to check that with Santander - their requirement is a minimum deposit of £1, which you can't subscribe until April 6th or later without breaching the ISA rules, as you've already subscribed to a Cash ISA in the current tax year.

nelsons_column

Cheers, will check with them