Opened Two S&S ISA’s in a Year

Renegademaster

Hi all,

I’m new to the board so go easy(!)

I opened a Stocks and Shares ISA with Fidelity in April 2018 but within this tax year. I transferred £400 in total into their holding account but basically due to the fact there was so many funds to choose from and the complexity of it I then withdrew that amount. The £400 was never properly invested into a stock or fund. Thereafter I opened up a Stocks and Shares ISA with InvestDirect and have £14.4k paid into. This potentially could rise substantially as I’ve invested in a couple of companies which are performing well. (At the moment however I’m not breaking even).

However I understand that HMRC could void my second HSBC ISA. Is there anyway around this by cancelling my initial ISA with Fidelity? Help appreciated.

masonic

The only possible solution is to complete an ISA transfer of the Fidelity ISA to the HSBC ISA, or to a different type of ISA (e.g. a cash ISA) before the end of the tax year. This isn't guaranteed to work, but should prevent Fidelity reporting the first S&S ISA to HRMC in their annual return.

Reed_Richards

Would withdrawing the £400 from the Fidelity ISA not work equally well?

Alexland

Fidelity may still report the withdrawn contribution so I agree with masonic that the safest thing to do would be to transfer the Fidelity ISA into the new one which would merge them.

masonic

Reed_Richards wrote: »

Would withdrawing the £400 from the Fidelity ISA not work equally well?

The OP has already withdrawn the £400, but this has no impact on the amount subscribed to Fidelity. Withdrawals do not cancel out subscriptions unless they are flexible withdrawals.

"Can I withdraw money out of a stocks and shares ISA?
Yes, you can withdraw money out of your ISA at any time. But please note that if, during a tax year, you withdraw money from your ISA and then reinvest at a later date, it will count towards your annual ISA allowance. We do not yet offer the flexibility to withdraw and replace money without the replacement money counting towards your ISA allowance."
https://www.fidelity.co.uk/stocks-and-shares-isa-faq

Self transfer is allowed once per tax year for cash ISAs, but there is no such leniency afforded to other types of ISA.

Renegademaster

Thanks all for your responses. I’ll be honest it has still left me a little confused but I’ll contact fidelity and let you know how I get on.

masonic

Renegademaster wrote: »

Thanks all for your responses. I’ll be honest it has still left me a little confused but I’ll contact fidelity and let you know how I get on.

You need to contact InvestDirect to initiate an ISA transfer from Fidelity to them.

Alexland

It's very simple you have contributed to two S&S ISAs in the same tax year so when the platforms do their end of year reporting they will make HMRC aware and they may declare the second S&S ISA invalid. This would be a problem as it is the one you wanted to keep.

As such the way to resolve the issue is to ask the new provider to transfer in the old one (even though it has a zero balance) to merge them together into one ISA. The new provider will become aware of your original deposit and be able to calculate your use of the allowance correctly.

Alex

Vortigern

masonic wrote: »

You need to contact InvestDirect to initiate an ISA transfer from Fidelity to them.

Would it be simpler to pay £10 into the Fidelity ISA, then ISA transfer that £10 to a cash ISA?

End result would be that you've contributed to one cash ISA and one S&S ISA during the current year.

Alexland

Yes that would work too but the OP would end up with an unwanted cash ISA to close so transferring into the wanted S&S ISA would be easier.

masonic

Vortigern wrote: »

Would it be simpler to pay £10 into the Fidelity ISA, then ISA transfer that £10 to a cash ISA?

End result would be that you've contributed to one cash ISA and one S&S ISA during the current year.

Yes, mentioned in post #2. There wouldn't be any need to pay £10 in, a zero balance ISA can be transferred.