Oversubscribed but bank says I haven't?!

jetfighter

I had a cash mini ISA with Standard Life until recently and paid approximately £4,500 into it between April 2010 - September 2010.

I then transferred it to Principality in October. Since then I have paid in approximately £750 and, as with my previous years' subscriptions with other banks, was expecting to have the excess returned to me if it went over £5,100, but since I wasn't sure how much excess there would be, I didn't calculate it exactly.

However the £750 has gone into my ISA and the funds have cleared. I decided to send Principality a secure message to ask them exactly how much of my limit I had left as I thought I was close to going over the limit, and I also explained to them in my message that I had paid in about £4,500 with my previous provider in the same tax year.

They have replied to me today saying I've only used up £733 of my current tax year's limit... and I know this isn't true. They're just calculating how much I've paid in since I moved to them, but aren't including what I paid in with Standard Life this tax year.

Any ideas as to how I should follow this up? I don't know how I'm meant to explain to them in any clearer terms than I have already that I had already paid in £4,500? I really want to just know the exact amount I still have left to pay in out of my £5,100 limit! :mad:

I'm also worried about this coming back to bite me at a later date, getting a tax bill, whatever may happen... any thoughts?

jimjames

From what you have said it sounds like you have nothing left of this years limit and are already over (£4500 + £750) so should not pay any more in as you could be liable for tax on any interest paid.

Mikeyorks

jetfighter wrote: »

Any ideas as to how I should follow this up?

Yes - you keep a record of what you pay in.

Where an ISA is transferred with partial current year subscriptions involved ... it is not the responsibility of the receiving provider to monitor your 'balance' available. You have to do that as there is no effective audit trail transferred. They have to do it where you are with them a full year - but don't have to return excesses - they can simply report to HMRC.

As you're mildly over the limit .... just leave it at that. You're likely to get a letter from HMRC sometime in 2011-12 telling you that you've oversubscribed. But they won't do anything else - provided it's a 'first offence'.

pqrdef

Standard Life was supposed to tell Principallity how much you'd subscribed since April 6. Principality may have misrecorded what they were told, or, Standard Life may have sent the wrong information, said it was all money from previous years. in which case there's not a lot that Principality can do about that.

Did you get some kind of closing statement from Standard Life?

What can complicate things is that many banks haven't got their act sorted on the application process, and sometimes it's impossible to open an ISA without making an unnecessary declaration that you aren't already subscribing to one. Which could also lead to your previous subscriptions being wrongly recorded as zero.

Did you pay any money into Principality before doing the transfer, e.g. when you opened the account?

jetfighter

Whenever I have had cash mini ISAs in the past and accidentally oversubscribed, I have had the excess returned to my current account immediately and that has let me know that I've reached the limit.

I wanted to make sure I paid in the absolute maximum this tax year and knew I was close to doing that, so I thought that by sending what I thought to be a bit extra would mean I would get some back, however that hasn't happened.

Mikeyorks surely it is the responsibility of Principality to not actually allow me to oversubscribe? :think: At least I always assumed that was the case. When I had ISAs with smile and NatWest that's how things worked. They kept track and if I accidentally went over, they returned the excess to me automatically. I assumed all ISAs worked like that and it was just an automatic limit built into the way ISAs work on online banking - didn't think it would involve any effort on their part and it was a simple automated calculation.

pqrdef I did have a closing statement from Standard Life but it didn't have all of my transactions on it, just the final balance, and by the time the transfer occurred they had disabled my online banking access. I do have my own record of what I paid in but I just wanted to make sure it was accurate by checking with Principality. I waited for the transfer to happen before paying in any money to Principality.

I've always wondered why there isn't a running total on your online banking page - e.g. you have paid in this much this tax year, and have this much left of your allowance. Seems like a good way to encourage people to save more and also to stop you from going over the limit. I wonder if any banks do this?

Baldur

jetfighter wrote: »

Whenever I have had cash mini ISAs in the past and accidentally oversubscribed, I have had the excess returned to my current account immediately and that has let me know that I've reached the limit.

The moral here is never to assume anything about financial products - some providers may provide that facility, others don't.

I've always wondered why there isn't a running total on your online banking page - e.g. you have paid in this much this tax year, and have this much left of your allowance. Seems like a good way to encourage people to save more and also to stop you from going over the limit. I wonder if any banks do this?

Some banks/building societies do, but you can often only (sort of) rely on this function if all of your current tax year's subscriptions are made into the same ISA account.

As others have said, the responsibility is ultimately yours, not the bank's/banks', to ensure that you only subscribe within your annual subscription limit - it's you that HMRC will chase, not the bank(s).

jetfighter

I've got a better system now for keeping track of my subscriptions (a report I can run in Microsoft Money) so hopefully in future tax years I won't have this problem again.

However, oddly enough, my partner has contacted Principality with the same question and they have provided the accurate amount (Standard Life + Principality subscriptions, totalling about £2,500) so I'm thinking they've maybe made a mistake with mine.

I'll contact them again, then make a fresh start in April with an accurate record of my own stuff.

cing0

You've actually committed 2 misdemeanours.

1.) You've subscribed or contributed new cash into more than one mini cash ISA in a tax year
2.) You've gone over the ISA investment limit.

I've done 1.) in the past with no repercussions. Years ago, it was not possible to open some cash ISA's without an initial deposit, even though you were going to transfer from another ISA manager. Even if you've transferred this years investment, I don't think you can contribute further up to the limit.

Suggestion : Take out (4500 + 750) - 5100 out of your Principality ISA. You may be liable for the tax on all of the interest from this years contribution but I don't even know anyone who's had direct communication from the HMRC about their ISA's.

Baldur

cing0 wrote: »

You've actually committed 2 misdemeanours.

1.) You've subscribed or contributed new cash into more than one mini cash ISA in a tax year

Incorrect, HMRC permits ongoing subscriptions (up to the annual allowance) following the transfer between different ISA managers - see Sections 11.20 & 11.21 of the HMRC Guidance Notes for ISA Managers.

Mikeyorks

jetfighter wrote: »

Mikeyorks surely it is the responsibility of Principality to not actually allow me to oversubscribe? ?

Normally that is the case. But you fall between the cracks where you have transferred in-year ..... and part contributed prior the transfer. They are obliged to keep you within £5340 (the indexed new limit) during next year .... unless you transfer again.

I've always wondered why there isn't a running total on your online banking page - e.g. you have paid in this much this tax year, and have this much left of your allowance. I wonder if any banks do this

A lot do. And people are always complaining that the figures are wrong. As they would be in your case for this year? Most unusually I had a 'variable' rate one with Halifax last year that was a transfer in (from them) from the matured funds of a fixed rate ISA. It told me all year that I had £5100 available to invest ........ despite the fact I'd used a full £10.2k into an S&S ISA outside Halifax. So it's not a reliable science!

Mikeyorks

cing0 wrote: »

You've actually committed 2 misdemeanours.

1.) You've subscribed or contributed new cash into more than one mini cash ISA in a tax year
2.) You've gone over the ISA investment limit..

That's totally wrong.

1) This is a transfer ..... therefore it's the same ISA but with a different provider. Fully allowed to contribute, to the extent of the allowance, either side of the transfer.
2) The ISA limit is £10200 ..... which has not been exceeded. Which is why I indicated the OP didn't need to take action - as HMRC won't other than (perhaps) a cautionary letter sometime after April 2011.

Suggestion : Take out (4500 + 750) - 5100 out of your Principality ISA.

Totally unnecessary to do that.