Paid in too much...

ptkloon

Hi guys,

I have recently noticed that I have paid too much into my ISA'a. I have a cash ISA that I have put £4800 into and an investor ISA that I have put the maximum £10200 into. I know that its my own fault but as they are both with Halifax online I thought it wouldn't let me place the money in.
Do I just remove the money from my cash ISA into another savings account and say nothing or do I have to contact the Inland Revenue like the bank has said? I am getting married this year so most of it will be spent in the next few months anyway.

Any help would be greatly appreciated.

Mikeyorks

ptkloon wrote: »

Do I just remove the money from my cash ISA into another savings account and say nothing or do I have to contact the Inland Revenue like the bank has said?

You need to contact the HMRC ISA helpline ..... and they will instruct on the remedy. As you've exceeded the overall £10.2k limit ..... they will probably insist you remove those funds which created the oversubscription ...... whether that be the cash or the S&S element.

Halifax should have systems in place to prevent an oversubscription. But they tend to run the S&S from a different place and on a different platform to the cash elements.

dunstonh

If it is your first error, then you dont need to do anything. HMRC allow one error per NI number (as long as its not excessive). In about 6-18 months you get a "naughty boy - dont do it again but dont worry about what you have done now" style letter. On more severe errors they would ask the provider to void the later ISA and return the funds (as Mikeyorks says above). However, your error is very common and not one I would expect them to do that.

The Halifax sales rep should have picked this up as part of their factfind does ask what ISAs you have already and if you have paid in this year. So, technically, you could complain and get Halifax to void the transaction.

Lastly, what the heck are you doing using Halifax for an S&S ISA? They are pretty much up there with the worst of the banks for S&S ISAs.

Mikeyorks

dunstonh wrote: »

However, your error is very common .

Would agree with you if the oversubscription remained below the £10.2k threshold.

Surely where the total exceeds £10.2k (in this case by close to 50%) ..... HMRC continue to act in accordance with their guidance (paras 12.36 and 12.37)? And insist on repair by removing the excess.

dunstonh

Mikeyorks wrote: »

Would agree with you if the oversubscription remained below the £10.2k threshold.

Surely where the total exceeds £10.2k (in this case by close to 50%) ..... HMRC continue to act in accordance with their guidance (paras 12.36 and 12.37)? And insist on repair by removing the excess.

You would think so but I know someone that over subscribed a few years back and got the "get out of jail card free" warning not to do it again but got to keep the excess.

Mikeyorks

dunstonh wrote: »

I know someone that over subscribed a few years back and got the "get out of jail card free" warning.

Strange - if it goes back that far. I know the guidance to ISA managers hasn't been updated for 3 years now. But it is very clear that oversubscriptions that exceed the overall limit - as opposed to just the cash limit - will need to be resolved. And had thought that still applied as HMRC still reference it as being current .

I did realise the rather odd extra allowance to over 50s in mid 09-10 would cause extra errors and likely lead HMRC into granting extra concessions. However the specific guidance to ISA managers at that time does strongly hint, as you say, that even the overall limit can now be breached on a one-off basis? Provided that is not 'excessive'! :

We will continue to operate our risk based investor compliance programme. Under that programme those who over-subscribe for one year, but not significantly in excess of the annual subscription limits, receive a letter drawing their attention to the ISA rules and advising them no action will be taken unless they over-subscribe in a later tax year. ISA over-subscriptions are only voided where the investor has:

• subscribed to a disallowed combination of ISAs for more than one year (serial offenders)
• or subscribed significantly in excess of the annual subscription limits

We do not plan to deploy any extra resources in this area as a result of the 2009-10 subscription limit changes.

I obviously need to amend my memory bank! Or accept that HMRC aren't consistent - as the relaxed guidance certainly doesn't stretch back the 'few years back' from your quote.

ptkloon

Thanks for the reply guys. Think I'll just keep quiet for now then if it seems straight forward enough.
The halifax S & S seemed to be one of the best at the time I took it out and my other accounts are with them (Bank of Scotland) so it is easier to have them in one place. I transferred over from Egg last yuear. The £10200 is now worth £11000. Is that any good? I've been putting in regularly this year plus one lump sum of £5000 in september
One option I was looking at was putting the excess into my partners ISA as it is for our wedding. Would that have been a good option?

opinions4u

The Halifax cash ISA application form asks you to sign to say:

I have not subscribed and will not subscribe more than the overall subscription limit in total to a cash ISA and a stocks and shares ISA in the same tax year

Personally I think that cash ISAs and stocks and shares ISAs should be completely separated, with no transferable allowance. A bit like TESSAs and PEPs. Indeed, giving the different names seems most sensible.

The £10200 is now worth £11000. Is that any good?

Compared to a cash ISA, it's great. Compared to other stocks and shares ISAs it's impossible to say without knowing the precise timescales and types of investment held within the ISA wrapper, but I'd anticipate that you could have done better.

dunstonh

The halifax S & S seemed to be one of the best at the time I took it out and my other accounts are with them (Bank of Scotland) so it is easier to have them in one place.

I'm afraid it has never been best in any area. In isolation it is easy to think that 7% on the S&S ISA is better than 2% on the cash ISA. However, when you compare bank funds (and charge) to external funds from the whole of market you realise that the banks are usually left behind.

ptkloon

Thanks again for the replies guys. It is easy for me to remove the £4800 I have put into my cash ISA and place it into my partners account. (She has a cash ISA and has put in £5100 but hasn't yet put into a S & S ISA) This way we would more or less both have the maximum amount in our ISA's.
Would anyone recommend doing this?