HMRC Letter - ISAs Oversaved?

mrsupremacy

innovate wrote: »

OK, assuming that most of the payments were deposits of new money, the problem is as I suspected. You paid new money into two ISAs in the same tax year. This is not allowed, and that's why the HMRC wrote to you with a warning not to do it again.

It's a rather unusual thing to do, wanting to pay into two ISAs with the same organisations in the same financial year. Can you explain why you felt it was the right thing to do? What are/were the interest rates on the two ISAs?

That may explain it. Thank you.

I opened the secondary ISA (cash-isa) as I was under the impression that I could have multiple ISAs and pay X amounts into each one. Obviously, I have misread the rules.

With the same organisation is because I like to have it all under "one roof" for ease of use. I really should look around at better interest rates. Interest rates are nothing special.

I think what I will do is transfer the 12 out of my cash isa and leave it dormant and close it. Then just stick with the one ISA.

melj16

is the letter definately relating to 2012-2013. I believe the letters just issued are for tax year 2011-2012? I may be wrong.....

innovate

mrsupremacy wrote: »

That may explain it. Thank you.

I opened the secondary ISA (cash-isa) as I was under the impression that I could have multiple ISAs and pay X amounts into each one. Obviously, I have misread the rules.

With the same organisation is because I like to have it all under "one roof" for ease of use. I really should look around at better interest rates. Interest rates are nothing special.

I think what I will do is transfer the 12 out of my cash isa and leave it dormant and close it. Then just stick with the one ISA.

There are a couple of organisations that allow administering your annual ISA allowance across several of their products. Nationwide being one of them, the other one I cannot remember. Never heard that NatWest is offering it.

However, there are very rarely any logical reasons for why you would want to keep more than one cash ISA product going (for new deposits) in the same financial year. In 99% of all cases, it's just a matter of picking the best interest rate and depositing as much as you can/are allowed to into that one ISA.

You still haven't explained why you wanted to deposit into more than one. But never mind, you most certainly now know better, the HMRC are letting you off with a warning, and may be you are taking this opportunity to look for better ISA interest rates than Natwest are offering.

Of course, if you have loads of time and energy, you could challenge Natwest as to why they allowed you to "illegally" deposit into more than one cash ISA in the same financial year. At best, you might end up with a grovelling letter and £25 compensation, but I doubt they will change their systems to prevent similar things from happening in the future. At worst, they'll just tell you politely to assume responsibility for your own financial affairs.

brewerdave

Have to agree with Melj16 - it is almost certain that the letter from HMRC refers to an earlier tax year - 2012-3 tax year has only just completed -no way have NatWest reported all transactions for the year yet.

Vortigern

innovate wrote: »

There are a couple of organisations that allow administering your annual ISA allowance across several of their products. Nationwide being one of them, the other one I cannot remember.

I think the other one may be M&S. They certainly used to allow you to apportion the current year allowance between their fixed and variable ISAs