2 S+S ISAs paid into in one year

matches23

I opened a S+S ISA 12 months ago and set up a £50 per month payment. Then I opened a second S+S ISA (with a different provider) last November. These where over 2 tax years, but I didn't realise I could only pay into 1 per tax year. Is this correct?

I have a £50 direct debit into the original one and a £200 direct debit into the second one. Is there anything I need to do?

Thanks.

Alexland

Yes you can only contribute new money into one S&S ISA in each tax year. If you ask the new provider to transfer in the old one it will look like you just moved the ISA to the new provider during the tax year which is allowed.

Obviously without knowing the details of the accounts then I couldn't comment on the impact to your investments, fees, etc.

AirlieBird

You need do nothing now but wait until HMRC contact you, which won't be until the end of the year or early next year. The second ISA will be deemed to be invalid which means it won't receive the ISA tax exemptions. However, as long as you are under your ISA allowance it will be "repaired" which means from the date HMRC notify the ISA manager it will regain ISA status.

matches23

Thanks both for your help.

The £50 per month saving is for my godson who is 4 years old. I want to give him a gift at around age 20 when he's trying to buy a home or get married. As it is only £50 per month is there any benefit to it being in an ISA as it seems I could make substantial capital gains before paying any tax anyway?

This would enable me to pay regularly into my long term savings fund £200 per month without this paying into 2 isas problem.

TheShape

Couldn't you invest £250 pm in the S+S ISA until he's 20 and give him 20% of the value?

matches23

Thanks TheShape good idea, although I was aiming to keep them separate. Will have to re-evaluate!