2 x Cash ISA,s In one year

skyman123

Hi,
Thanks for reading and responding to this post in advance,

Currently i have a Barclays ISA with payments made as follows
2016 - £15000
2017 - £20000
2018 - £20000 + £11000 transfer in from another Barclays cash ISA

I have opened another cash ISA with oak north (£20k) on the 3rd of April with the intention of transferring part of the Barclays ISA across (keeping the total under £86000 for FCS)
What i assumed was ISA's run like most other things 1 apr to 31st march and have just found out they don't !
So having spoke to HMRC today i got nothing back but sit tight and it was a very vague sit tight more like they didnt have a clue.
Both Barclays and oak north's ISA departments are closed on the weekend.
Having done some reading it seems the general consensus is HMRC will request the closure of the Oak North ISA eventually and convert it to a standard account or transfer the money to a current account thus i pay tax on any income received.

The questions i have are as follows.
Can i open another ISA now as its past the 6th April for the new tax year.

Can i close the first oak north ahead of time and place the 20k into another cash ISA with oak north and complete the transfer from Barclays or do i just sit tight on both ISA's not complete the transfer and suffer the weaker interest rate.

Or would it be best to transfer barclays to oak north but into a second ISA with them leaving the first alone.

If i continued and transferred the Barclays ISA into the first oak north (invalid) ISA would i be liable for interest on the full amount or just the interest of £20k once HMRC invalidates the ISA?

Thanks in advance for your responses its very much appreciated.

david78

If the account you opened on 3rd April is only to be used for a transfer in you have not broken any rules.


So do the transfer-in of your choice.If you don't go ahead with a transfer-in that's OK too. Just leave the account unfunded.


You can open as many Cash ISAs as you like each tax year (6th April-5 April) but you can only contribute to one of them. The others must be used for transfers in of previous years ISAs. If you transfer-in a current year's ISA that becomes the ISA you can contribute too. The last point is academic for you as you don't have a current year's ISA yet.


Now its the new tax year you can open another Cash ISA to make contributions too against this year's allowance.

skyman123

Thanks David,

Unfortunately i did fund it with 20k thus i have fallen foul of the isa rules

colsten

david78 wrote: »

Now its the new tax year you can open another Cash ISA to make contributions too against this year's allowance.

I would not open any more ISAs, and not make any further deposits into existing ISAs, until the matter about the potential overpayment in tax year 2018-19 has been resolved.

If there was indeed an overpayment, on April 3 2019, I reckon there's a good chance that HMRC will do nothing more than issue a stern warning not to do it again, and consider the deposit made on April 3 2019 as a deposit for the tax year 2019-20.

Bottom line though is that nothing should now be done without HMRC guidance. If their phone line is useless, the OP should write to them with the exact details and ask for guidance.

colsten

There is complex guidance for ISA Managers on how to deal with overpayments etc. https://www.gov.uk/guidance/close-void-or-repair-an-isa-if-youre-an-isa-manager

Rather than trying to figure out something yourself, you should ask HMRC to give you written advice on what to do, and then do whatever needs doing. Keep that written advice in a safe place for the next umpteen years in case they do an audit later on.

colsten

skyman123 wrote: »

What i assumed was ISA's run like most other things 1 apr to 31st march and have just found out they don't !

Anything to do with tax and tax allowances has been within the limits of tax years, which for 200-odd years have been 6 April in one year to 5 April the next. https://www.taxback.com/blog/uk-tax-history-lesson-uk-tax-year-ends-april-5th

skyman123

Thanks Colston for the information much appreciated, its what you get for assuming
I will talk to HMRC on monday i might get more luck (but i am not hopeful) otherwise i will write to them i will talk to oak north also as they have the invalid isa and might be able to notify HMRC on my behalf

badger09

skyman123 wrote: »

Thanks David,

Unfortunately i did fund it with 20k thus i have fallen foul of the isa rules

How did you fund the Oaknorth ISA? FP transfer on 3 April or cheque?

On what date does your Oaknorth ISA show the £20k credited?

If 3rd 4th or 5th April, then you have broken the ISA rules but you should not try to correct this yourself.

colsten wrote: »

I would not open any more ISAs, and not make any further deposits into existing ISAs, until the matter about the potential overpayment in tax year 2018-19 has been resolved.

If there was indeed an overpayment, on April 3 2019, I reckon there's a good chance that HMRC will do nothing more than issue a stern warning not to do it again, and consider the deposit made on April 3 2019 as a deposit for the tax year 2019-20.

Bottom line though is that nothing should now be done without HMRC guidance. If their phone line is useless, the OP should write to them with the exact details and ask for guidance.

I agree HMRC will probably do nothing more than issue a slap on the wrist, but doubt they will assume the £20k is for 2019/20. They have no way of knowing whether OP has already made a further £20k subscription for the current year.

Reed_Richards

skyman123 wrote: »

What i assumed was ISA's run like most other things 1 apr to 31st march and have just found out they don't !

Nothing financial runs from 1st April to 31st March in the UK. Perhaps you are thinking of the Indian financial year?

Alexland

Reed_Richards wrote: »

Nothing financial runs from 1st April to 31st March in the UK. Perhaps you are thinking of the Indian financial year?

Many companies end their financial reporting year on 31st March. It's preferable to 31st December as for sales guys getting big deals approved against a year end deadline while the customer approvers are away or unfocused over the Christmas period is a pain.

Alex

Reed_Richards

Alexland wrote: »

Many companies end their financial reporting year on 31st March.

Fair enough but a company can choose to end its financial year on any date. And why not choose 5th April instead of 31st March? Is there actually any advantage to a slight misalignment between a company's financial year and the one used for all taxation?