Oversubscribed but bank says I haven't?!

Mikeyorks

jetfighter wrote: »

I'll contact them again,

I wouldn't. 'Sleeping dogs .....' and all of that? You're marginally over the 'cash' limit but well within the overall ISA limit (£10.2k). Unless you're a serial offender ..... HMRC aren't going to be perturbed.

cing0

Mikeyorks wrote: »

That's totally wrong.

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.

In 2010-11 tax year your allowed to contribute:

upto £5,100 into a cash ISA
and upto £5,100 into a S&S ISA
or
£0.00 into a cash ISA and upto £10,200 into a S&S ISA.
As soon as you put a penny into a cash ISA, your annual limit is 5100 in any one ISA.

Baldur

cing0 wrote: »

As soon as you put a penny into a cash ISA, your annual limit is 5100 in any one ISA.

Incorrect again, I'm afraid.

If you (thoretically) subscribed just 1p to a Cash ISA, you could still subscribe 10,199.99 to a Stocks & Shares ISA.

cing0

Baldur wrote: »

Incorrect again, I'm afraid.

If you (thoretically) subscribed just 1p to a Cash ISA, you could still subscribe 10,199.99 to a Stocks & Shares ISA.

Yes, it appears for some reason I assumed the S&S limit dropped when a cash investment was made.
Sorry for the errant posts.

pqrdef

cing0 wrote: »

Yes, it appears for some reason I assumed the S&S limit dropped when a cash investment was made.

That is how it used to work. You could have a maxi ISA or two mini ISAs.

blueberrypie

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.

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.

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?

It isn't quite as simple as having an automatic limit of £5100. If you've transferred funds from ISA Provider A to ISA Provider B, you might also have transferred interest, paid by ISA Provider A. Let's say you transferred £4000 + accrued interest of £50. ISA Provider B receives £4050 - but your ISA allowance still has a further £1100 (because you've only paid in £4k so far this year). Not only that, but the £4050 that ISA Provider B has received could also include contributions from previous years - for example there could be £3k from this year, £1k from last year and £50 interest - which would leave you with £2100 of your allowance. Or it could consist entirely of contributions from previous years, in which case you still have £5100 that you can contribute.

I don't know if ISA Provider B is routinely provided with information about how much of the transferred funds comprises current-year contributions and how much comprises interest, but you can see how an automatic limit wouldn't be quite as straightforward as it first appears.

Did your ISAs with Smile and Natwest include funds that had been transferred in during that tax year?

jetfighter

It's all a bit more complicated than I thought!

However, like I said in a previous post, my partner (who has the exact same ISA history as me as we've been together 10 years and have always transferred our ISAs to the same providers at the same time) contacted them and asked them the same question, and was given the accurate figure. (Subscriptions from same tax year with Standard Life, minus interest from Standard Life, plus subscriptions with Principality.) So I think Principality have just made a mistake as they got my partner's total spot on to the penny (we had accurate records for that account but just wanted a second opinion.)

I move money into both our ISAs every month so yes, I expect all of our previous transfers will have included money from that same tax year as I don't think I've ever done a transfer at the start of a tax year.

Baldur

blueberrypie wrote: »

I don't know if ISA Provider B is routinely provided with information about how much of the transferred funds comprises current-year contributions.....

Provider A, on the paperwork that accompanies the transfer to the new provider (B), is required:

1. To indicate that current year subscriptions are being transferred.

AND

2. To enter the total amount subscribed to the ISA in the current tax year.

jetfighter

Well I had already contacted Principality (before I was advised not to ) but luckily they replied today, apologising for getting the figure wrong, and letting me know I'd gone over my limit by £17.18.

They've reduced the amount in my actual ISA and have sent me a cheque for the excess - so that's all sorted now.

:T:T:T