I accidentally opened a second ISA, now have to contact HM Revenue?

Jlawson118

I'm just wondering if anybody is familiar with the process or anything? I'm a little worried.

I opened a Cash ISA with First Direct February 2015 (Tax year 2014/2015) and since then I haven't opened another one.
However, the account was empty and has been for a few months, I thought that I would be able to open another one if one was empty, and I opened one with Barclays just short of a month ago (tax year 2016/2017)

I asked something on here the other day and I learnt that I was only allowed to submit to one ISA per tax year, so I decided to close the Barclays one down. I went to branch today to do so, and the lady was quite rude actually, but she told me to contact First Direct and mention what's happened but I won't be able to put money in until April 2017.

I don't know if I put any money into the Barclays ISA, but if I did then it was only £10/£20 or something and came out a few days later. Anyway I just contacted First Direct and they told me I've used £1600 of my allowance with them this year, but I need to contact HMRC.

I pretty much worry about what will happen, it was just a simple mistake

dunstonh

I'm a little worried.

Don't be. HMRC allow one get out jail free card per NI number.

They will either tell you not to make the same mistake again and leave it at that or they will tell the second ISA provider to unwind the cash ISA.

[Deleted User]

Jlawson118 wrote: »

I'm just wondering if anybody is familiar with the process or anything? I'm a little worried.

I opened a Cash ISA with First Direct February 2015 (Tax year 2014/2015) and since then I haven't opened another one.
However, the account was empty and has been for a few months, I thought that I would be able to open another one if one was empty, and I opened one with Barclays just short of a month ago (tax year 2016/2017)

I asked something on here the other day and I learnt that I was only allowed to submit to one ISA per tax year, so I decided to close the Barclays one down. I went to branch today to do so, and the lady was quite rude actually, but she told me to contact First Direct and mention what's happened but I won't be able to put money in until April 2017.

I don't know if I put any money into the Barclays ISA, but if I did then it was only £10/£20 or something and came out a few days later. Anyway I just contacted First Direct and they told me I've used £1600 of my allowance with them this year, but I need to contact HMRC.

I pretty much worry about what will happen, it was just a simple mistake

I'm confused - If the account was 'empty' how have you used £1600 of your allowance this tax year?

primalmother

Sleazy wrote: »

I'm confused - If the account was 'empty' how have you used £1600 of your allowance this tax year?

the Barclays account is empty the first direct account has used £1600 of the allowance, at least that's how I read it

[Deleted User]

primalmother wrote: »

the Barclays account is empty the first direct account has used £1600 of the allowance, at least that's how I read it

Maybe it's the wine - I read it differently, maybe the OP will clarify.:D

Jlawson118

Sleazy wrote: »

Maybe it's the wine - I read it differently, maybe the OP will clarify.:D

Hahaha yep, I've used the First Direct one, have done for nearly two years now. The Barclays one remained empty

jamesd

If you hadn't paid any new money into the second one in the current tax year you haven't broken any rules. An ISA account isn't fully opened until the first money has been placed into it so you may not even have actually fully opened the second one. Just applying for an account with no money isn't enough to break the rules.

If you hadn't paid any money into the first one in the current tax year it would have been fine to pay into the second one because it's not accounts that matters but accounts into which money has been paid during the current tax year.

If you withdrew all of the money from the FD account before subscribing to the new account and didn't then pay any more into the FD account that would also be within the rules, classed as a self-transfer.

Jlawson118

jamesd wrote: »

If you hadn't paid any new money into the second one in the current tax year you haven't broken any rules. An ISA account isn't fully opened until the first money has been placed into it so you may not even have actually fully opened the second one. Just applying for an account with no money isn't enough to break the rules.

If you hadn't paid any money into the first one in the current tax year it would have been fine to pay into the second one because it's not accounts that matters but accounts into which money has been paid during the current tax year.

If you withdrew all of the money from the FD account before subscribing to the new account and didn't then pay any more into the FD account that would also be within the rules, classed as a self-transfer.

So in saying that, would I be able to withdraw from Barclays and put into First Direct?

jamesd

No.

You are allowed one self-transfer of a cash ISA per tax year and if you have paid money into both during the current tax year you have already used your one when you withdrew all the money from the FD one and then paid money into the Barclays one. HMRC can be expected to tell FD to void the ISA if you just pay money into it again, though they do have discretion and if you're not over the allowance they might let you get away with it in one tax year per lifetime. Voiding means removing from the ISA tax wrapper.

You can do an ISA transfer instead, to either FD or any other ISA provider.

If you paid money into the Barclays one before you had withdrawn all of the current year money from the FD one you've already broken the rules because that is not in accord with the requirements of a self-transfer. In that case you'd still be fine once because HMRC would tell you "you broke the rules, that's your one chance per lifetime gone, do it again and we'll void the ISA next time".

The FD cash ISA doesn't have the flexible ISA feature and I'm assuming that the Barclays one doesn't either. For a flexible ISA there's more flexibility in this and it doesn't use the self-transfer rule. I don't know whether the Barclays ISA has the flexible ISA features or not.

eskbanker

Jlawson118 wrote: »

So in saying that, would I be able to withdraw from Barclays and put into First Direct?

You could really do with getting your facts straight about what, if anything, went into your Barclays ISA, which, after all, you only opened "just short of a month ago" - you obviously can't withdraw anything from an ISA if there's nothing in there!

Jlawson118 wrote: »

I don't know if I put any money into the Barclays ISA, but if I did then it was only £10/£20 or something and came out a few days later.

Jlawson118 wrote: »

Hahaha yep, I've used the First Direct one, have done for nearly two years now. The Barclays one remained empty

bigfreddiel

Jlawson118 wrote: »

So in saying that, would I be able to withdraw from Barclays and put into First Direct?

If you withdraw the ISA investment it loses its tax free status and when paid into another ISA its part of your allowance.

You should transfer the money, and you get the receiving account manager to do the transfer. This maintains the tax free status and doesn't use any of your ISA allowance

That's assuming you have anything in your account

It's all very simple

Cheers fj