accidentally paid into Help To Buy ISA and another

lj2

Hi
I opened a Virgin Help To Buy ISA for my daughter last January, and have been paying into it monthly since then.
However, my daughter got a new job in July and started transferring money into a pre-existing Nationwide eISA linked to her current account.

Given that you should only pay into one cash ISA in a year, my daughter is happy to close the Nationwide eISA, but we don't want to risk losing the government bonus from the Help To Buy ISA when the time comes.

What should we do?

masonic

As the Virgin HTB ISA was the first she paid into this tax year, this is not at risk. HMRC will decide whether tax should be paid on any interest received in the Nationwide ISA. If it allows flexible withdrawals, she could remove all of the money she paid in this tax year and have net contributions of zero, which might avoid any problems.

lj2

thanks, that's reassuring
do you think I should contact HMRC to explain what's happened?

eskbanker

lj2 wrote: »

thanks, that's reassuring
do you think I should contact HMRC to explain what's happened?

You shouldn't contact HMRC if these ISAs are your adult daughter's!

Having said that, it's perhaps worth reading up on the matter at
https://www.gov.uk/guidance/close-void-or-repair-an-isa-if-youre-an-isa-manager, where the ISA manager "should advise the investor that HMRC will contact them in due course" but "If the investor wishes to contact HMRC to discuss the error, they can phone the ISA Helpline".

masonic

Based on reports from others who have contacted HMRC, it's probably not worth it as they'll just tell you to wait until the ISA provider provides them with the details.

margaretx9

You/your daughter could try switching the Virgin help to buy isa to Nationwide's help to buy isa as Nationwide (along with RBS/Natwest and a few others) allow you to pay into multiple cash isas including HTB isas in one year. Both HTB isa products pay 2.5% and you can transfer into Nationwide online.

That might get round the problem as at tax year end all her investments will appear as Nationwide accounts - given she has invested in a Nationwide eisa (I presume you mean their flexclusive isa?).

Just a suggestion to deal with this.

https://www.nationwide.co.uk/products/isas/transfer-your-isa