Paid 2 Isas help!

Hobbslee

I set up a bank standing order last year to pay into an ISA every April. This year I decided to try another ISA provider and opened an account and paid in £20,000 at the start of April. I just looked at my other ISA account and found £20,000 had been paid into that because I forgot the standing order I set up with the other ISA last year so now I have paid £20,000 into both ISAs in the same tax year. I have cancelled the standing order so it cannot happen again. I was going to withdraw the money from one ISA before it could earn much but I read online different advice. One said do not try to correct it yourself or withdraw the money as it can make things more complicated. It said HMRC systems automatically identify over payments and write to the account holder at the end of the tax year telling them what to do. But other websites said people can get a penalty for paying in more than the limit in one year. What do I do now? What will happen?

short_butt_sweet

Hobbslee wrote: »

This year I decided to try another ISA provider and opened an account and paid in £20,000 at the start of April.

to be picky: the tax year begins on 6 april, not 1 april. so have you subscribed twice in the current tax year (beginning 6 april 2019) or last tax year (which ended on 5 april)?

assuming it's twice in the current tax year ... is either of the 2 ISA "flexible"? because if either is, then you can withdraw the £20,000 from that ISA (before the current tax year ends), and it is as if you'd never subscribed to it, which means there's no breach of regulations after all.

OTOH, if neither ISA is flexible (or if one is, but you don't make a flexible withdrawal from it), then the first ISA that had a £20,000 subscription paid into it during this tax year is valid, and the second to be subscribed to will be found to be invalid, and you can't make it the other way round. HMRC will only notice this after the current tax year ends, and will then contact you and the invalid ISA provider. you can take money out of the invalid ISA now (be careful not to take money out of the valid ISA instead!), but you will presumably earn a few days' interest on the ISA anyway, which HMRC will make taxable interest.