Paid too much into ISA

purplestar133

I've got a payment on it's way into my Egg ISA which is already full for this year. It's a direct debit and I forgot to stop it once I'd filled my ISA. It's not much more than a pound so I'm not bothered if I lose the money, but don't want to get in trouble! Do I need to ring HM Revenue and Customs or should I just let my bank reject the payment (hopefully they will) and leave it at that?

Lansdowne

I would phone HMRC but only if the payment goes through. I rang them for a similar reason and the answer was simply "is this the first time? if so don't do it again."
I suspect it would be different for a larger amount.

Sillychuckie

Lansdowne wrote: »

I suspect it would be different for a larger amount.

They actually tolerate quite a bit of over subscribing before they start asking you for money back (i.e. pay tax on that which was previously 'tax free').

When I applied for a Barc Tax Haven ISA for 08, they opened it incorrectly in 07... which meant I had subscribed the full allowance, twice, for 07 (not intentionally, obviously).
HMRC did notice, but I just got a 'please don't do it again' letter.
I figured they would just say to me 'dont open one now for 2008, as it will even things up', but they didn't. In fact, they confirmed in writing that I was OK to subscribe for 08 again, so in essence, I have had an additional years allowance.
I know 2 others this has happened to also.

Unless you are a serial offender, they obviously have bigger fish to fry.
With interest rates as they are, they aren't losing out that much anyway.
I really wouldn't worry over £1.

This is going to happen to a lot of people this year, especially with the new split of the CASH/EQUITY ISA allowances, which will no doubt confuse some or cause them to over invest if regularly saving into both.
I'm sure that with Barclays opening ISAs in the wrong year for hundreds (if not thousands) of customers last year, it is nothing new to them.

Just write a letter to cover your side (as I did when it happened to me) explaining the situation.
SC.

savetilibleed

Lansdowne wrote: »

I would phone HMRC but only if the payment goes through. I rang them for a similar reason and the answer was simply "is this the first time? if so don't do it again."
I suspect it would be different for a larger amount.

Yes I agree with that. Come clean. I broke rules paying into 2 ISAs in one year it was only £10. I phoned HMRC who said all that might happen is I might get a warning letter as I now realised what I did.

Andy_L

When I did it my bank noticed and sent the money back to my account

purplestar133

Thanks everyone. I rang HMRC and they asked first whether I had ever paid too much into an ISA in any previous years, I said no and they said in that situation they probably wouldn't take any action. They added I might get a letter when the banks report back to them later in the year - as a warning, I suppose.

They payment has gone into my bank - it wasn't rejected. Do you think I should move the amount that I've oversubscribed with, out of there, or just leave it in?

masonic

purplestar133 wrote: »

They payment has gone into my bank - it wasn't rejected. Do you think I should move the amount that I've oversubscribed with, out of there, or just leave it in?

Don't withdraw it yourself, because it won't make any difference - it's the total going into the account that is added up, regardless of what you withdraw. Why not let Egg know and see if they'll correct the mistake for you. At least then you won't have used up your 'free offence' with HMRC.

purplestar133

masonic wrote: »

Don't withdraw it yourself, because it won't make any difference - it's the total going into the account that is added up, regardless of what you withdraw. Why not let Egg know and see if they'll correct the mistake for you. At least then you won't have used up your 'free offence' with HMRC.

Thanks. I've just realised I said in my first post that it's a direct debit - don't know why I said that! Must be getting confused as it's not! The payment is from a cashback site, not a bank or anything. Do you think that would affect whether they could do anything about it?

Does everybody get one free offence then? What happens if you make a mistake again, even years later?

purplestar133

Just rang Egg. After spending a while correcting the lady I spoke to who was telling me what I had paid in and what interest I had, even though she was wrong, she still couldn't work out why my overpayment hadn't bounced back. She said she would email the 'Complex Queries Department' and get back to me in 5 working days. Won't hold my breath then. Wish I hadn't bothered!

masonic

Well, they'll either fix it or they won't. Based on people's experiences here, HMRC always seem to let you get away with the first offence. It would just be a shame if yours was only for such a small sum - you'd be much better off if you got let off a £3600 oversubscription!

What is supposed to happen is if you make an oversubscription like this, the interest earned in the account becomes taxable from the date of the mistake until either you or HMRC notify the ISA provider and they then take steps to repair the account and restore its tax-free status.

Lokolo

To be fair I can see the womans point. Egg have a limit each tax year that won't let you put more money into it. My friend had £2,999 in last year but it wouldn't let him get to £3,000. I guess there was a slight programming problem. However they overuled it and put in £1 for him.