Accidentally paying into 2 ISAs in April

Tom_Biggs

I have been paying £200 per month by standing order into an ISA all year but froze the payments in March and deleted the standing order from my online bank account. I thought I had therefore stopped making payments and cancelled them altogether.

I have just opened a new ISA (Santander) to transfer the money into but have realised that my bank (LTSB) made a payment of £200 four days ago (10th April) into the initial ISA. I rang the bank (LTSB) and they said that as I froze the payments rather than cancelling the entire standing order set-up, that the payment automatically went through this month instead. They said that the ISA provider (Barclays) would most likely be able transfer the money back to me if I explained the situation. Barclays have said to me that they cannot do anything and that it is too late as the payment has been made.

This means that I cannot use the new Santander ISA (which I have not paid into yet) and have to leave my money in a Barclays ISA that will now pay very low interest this year due to the end of the initial bonus.

Is there anything I can do or any authority I can get to help me? This is a genuine mistake and I have realised it and spoken to both banks almost immediately.

Zekko

If you're new Santander ISA allows transfers in, you could transfer your Lloyds ISA to it (whole balance), and then continue to fill up the Santander ISA with the remaining annual alowance (£5640-£200 = £5440).

innovate

It depends very much which of the Santander ISAs you have - - if it's one of the fixed rate ones, you can probably only put more cash in within a fortnight of opening. If you have another £5,440 ready to deposit, you could ask Santander to transfer the entire Barclays ISA (you would tick "....close your ISA..." on the transfer form).

If it's an ISA into which you can pay all year long, you can do as Zekko suggested.

If you can put your money away a bit longer, and if Barclays allow partial transfer, you could ask to have your previous years' ISA amoun(s) transferred into a fixed term Santander ISA, to get better interest. Then request a second transfer of this year's money (the £200), into the ISA that you will drip-feed during the year.

All taking a bit of effort, but worth it - - don't settle for the terrible interest rate at Barclays.

BTW, it looks as if Barclays did exactly as guided by the HMRC.

Tom_Biggs

Thank you both. It's an ISA that I can pay into all year. So just to confirm – Even though I have already paid £200 into my existing Barclays ISA, if I transfer the lot over to the new Santander ISA I will still be able to pay in up to £5440 to the new ISA and will not be breaking any rules by paying into 2 ISAs in one tax year?

innovate

Yes you can.

Just get the transfer form to Santander asap, and don't pay any money into your Santander one until after the transferred money has arrived. This shouldn't take more than a fortnight.

BTW, there's a small problem on the Santander online form - - you need to answer "yes" to a) and b). They say you need to then answer c) and d) if you answered b) with yes. But they already told you that you should ignore c) and d) if you answered 'yes' to a).
Confused? So was the designer of the form. Just say yes to a) and b), should be good enough.

Good luck!

pqrdef

Tom_Biggs wrote: »

Thank you both. It's an ISA that I can pay into all year. So just to confirm – Even though I have already paid £200 into my existing Barclays ISA, if I transfer the lot over to the new Santander ISA I will still be able to pay in up to £5440 to the new ISA and will not be breaking any rules by paying into 2 ISAs in one tax year?

Correct. Wait until you're told the transfer paperwork has been completed before you pay any more money in.

New_York_No1_fan

Tom_Biggs wrote: »

Thank you both. It's an ISA that I can pay into all year. So just to confirm – Even though I have already paid £200 into my existing Barclays ISA, if I transfer the lot over to the new Santander ISA I will still be able to pay in up to £5440 to the new ISA and will not be breaking any rules by paying into 2 ISAs in one tax year?

Sorry I beg to differ on this one. The HMRC website states

A. There are limits on the number of ISA accounts you can subscribe to each tax year. You can only put money into one cash ISA and one stocks and shares ISA - one each for cash and stocks and shares.
But in different years, you could choose to save with different managers. There are no limits on the number of different ISAs you can hold over time.'

If you have already subscribed your £200 to barclays since April 2012, you can only transfer your ISA to another provider but will not be able to pay anymore money in as this would count as subscribing to more than 1 ISA in the same tax year.

It'd be better to put as much money as possible into Barclays (if its still open) and then transfer for a higher rate.

Sorry.

evenasus

New_York_No1_fan wrote: »

If you have already subscribed your £200 to barclays since April 2012, you can only transfer your ISA to another provider but will not be able to pay anymore money in as this would count as subscribing to more than 1 ISA in the same tax year.

This it totally untrue!

His ISA will be the same ISA - just in a different 'tin' so to speak.

I have been opening and moving ISAs & before that TESSAs since 1991.

Sylvia1982

Hello Tom Biggs,
Sorry to say this, but you can only put all monies into the Barclays ISA that you subscribe to prior to transferring it to your new Santander ISA. If you do not do this, you will not be able to use your full cash allowance for this current tax year.

Sylvia

AirlieBird

Tom ignore the posters that say you cannot use your allowance if you transfer. They are wrong. You can transfer your Barclays ISA to Santander and deposit your remaining allowance in to Santander.

I could have sworn there was an example on HMRC's website to confirm this, but I cannot find it now.

evenasus

AirlieBird wrote: »

Tom ignore the posters that say you cannot use your allowance if you transfer. They are wrong. You can transfer your Barclays ISA to Santander and deposit your remaining allowance in to Santander.

I could have sworn there was an example on HMRC's website to confirm this, but I cannot find it now.

I thought so too but can't find it.

BUT we know how ISAs work - don't we!