help i have two isa accounts

blinko

help i have two isa accounts, am i doomed to a visit from the taxman, i have one with loyllds and one with HSBC although that one is a little empty as i only set it up about 3 months ago.

but at the time i didnt know it was illegal to have two mini cash isa's.

does anyone have any tips on how to get out of this jamboree.

p.s has anyone checked out northern rocks isa's
fixed rate 6.0% for 4 years not bad or they got a 5.5% for a yearly account

alared

You can have as many mini cash ISA accounts as you like as long as they are opened in different tax years (tax years run April to April)

Milarky

blinko,

Only one ISA per [tax] year...

Second ISA may not be opened in same [tax] year...

If a second ISA is opened the first ISA is allowed but the second one must be closed...

If HSBC is your 'only' ISA opened in 2004-05 tax year you are fine... Keep that open. Pay more in if possible... transfer if you wish only after the end of the tax year..

[Is that part right? Can you transfer an ISA in the year of its opening/of its added subcriptions AND even pay the balance - up to annual ISA allowance - into the 'transferee' ISA?]

blinko

thanks i have closed down my hsbc as there wasnt muh in there and switched to a high interest account at 2.28% or something ridiculously damn high street interest rates.

but now im hopin to get involved in northern rock one year or 4 year isa or abbey isa and switch it from lloyds

Robert_Sterling_3

2.28% on not very much may be OK.
It is very easy to get about 5% though.

dunstonh

You didnt say if they were different tax years. If they are from the same tax year, then the first one is treated as the real one and the second gets closed and tax paid on it.

blinko

yeah sorry they are both from this year

basically i opended a hsbc £1000 isa and forgot about it and then i opended a £3000 with lloyds and then about 3 months later i remembered the hsbc isa and had to close it down.

dunstonh

Well thats it then. You closed the one you could keep and the other one will be forced to be closed sometime in the next 12 months.

You now cant do another ISA until next tax year.

Milarky

Officially that would be right, DD. I assume the records that the banks keep on opening dates [etc] will expose blinko's errors to the taxman in due couse? [otherwise I would just keep quiet about it if I had done this wrongly]

Is there any 'amnesty' worth pursuing with the Inland Revenue over this or should blinko be advised to look for other high interest [non ISA] accounts now [ie closing the 2nd ISA also]?

dunstonh

I've come across two people in the last few years and the first they realised they had done it (at least that is what they told me) was when the IR had sent them a letter telling them of their error. They did relate to ISAs a few years before though so it did takes it time.

There is no amnesty although there is no penalty apart from the tax correction.

isasmurf

From what I understand this was the case in the first couple of years of ISAs. Then the taxman became slightly more tolerant and put in place some procedures to allow for 'innocent' errors, particularly where people open an incompatible combination of ISAs or do a self-transfer (close the account and take the money to another ISA themselves). I'm not sure if the taxman still takes this view as I've heard nothing about them since I was first told about them.

I think if the taxman decides this is an innocent error then the second ISA that would normally have been made void will be allowed to remain open. If this is the case tax relief will be lost until the bank is notified of the error, at which point the account will become a valid ISA and interest will be received tax free.

I would keep the account and see what happens, I mean what have you got to lose?