Accidentally Paid Money into Last Years ISA Provider Today, any options?

Oneday77

I'll hold my hands up I dropped the ball a little here.

Last year I had a S&S ISA with Santander with a monthly DD into it of £150. I bank with them and it was simpler for me at the time.

This year I wanted to keep the Santander one as it is, not extra funding and open a new account with Vanguard. Problem is my DD normally comes out on the 5th, though not on a Sunday, doh!. I did cancel it, over the weekend and now it's come out today, adding into the 20/21 allowance. Having called they are advising I can transfer or stick with them.

My concern is a transfer might be a bit too volatile right now and I'd prefer not to. As for stick with them I wanted to try a VLS60 or 80 this year with spread risk. Do I have any other options? Could I leave the £150 in Santander and open with Vanguard and let it sort itself out in 12-18moinths time.

eskbanker

Don't know what you mean by transfers being 'volatile', but the simplest thing would seem to be to open the account with Vanguard, instruct them to transfer just the 2020/21 £150 from Santander, and carry on with Vanguard thereafter.  I haven't checked whether Vanguard and Santander both allow partial S&S ISA transfers but if not then go via an intermediary cash ISA....  Don't go down the 'head in the sand' route hoping that it'll sort itself out, that could prove expensive, as HMRC recognise the first one as valid in such circumstances and void the second one!

Oneday77

eskbanker said:

Don't know what you mean by transfers being 'volatile', but the simplest thing would seem to be to open the account with Vanguard, instruct them to transfer just the 2020/21 £150 from Santander, and carry on with Vanguard thereafter.  I haven't checked whether Vanguard and Santander both allow partial S&S ISA transfers but if not then go via an intermediary cash ISA....  Don't go down the 'head in the sand' route hoping that it'll sort itself out, that could prove expensive, as HMRC recognise the first one as valid in such circumstances and void the second one!

Thanks

The Santander S&S is in their own fund. So by volatile, I rightly or wrongly, assumed it would be 'cashed' out. Where it could sell on a dip and buy on a high. Though I do recognise that it'll probably have little relevance in the current market.

I only suggested the head in the sand after finding a couple of 2-3 year old posts on here. Wasn't sure if the advice had since evolved and didn't want to necrobump old posts.

I'll see if I can do a this year only transfer with Vanguard, assuming so it's as I need it to be. Didn't know that was a possibility. Though Santander did try and get me to keep this year with them and transfer last years....

Albermarle

Where it could sell on a dip and buy on a high.

This is possible , although there is a 50% chance it could be the other way around . 

eskbanker

Oneday77 said:

The Santander S&S is in their own fund. So by volatile, I rightly or wrongly, assumed it would be 'cashed' out. Where it could sell on a dip and buy on a high. Though I do recognise that it'll probably have little relevance in the current market.

The markets themselves are indeed relatively volatile at the moment but in the context of an investment of £150 that's currently hindering you from investing how you intend to for the next 364 days, a change of a few quid either way is hardly going to be life-changing!

glider3560

Where you accidentally pay into two ISAs in one year, the ISA manager can reverse the subscription (payment in) to "repair" the ISA.  It's simple with Cash ISAs, but with S&S you'll have to sell investments to cover the refund if there isn't enough cash in the account.

masonic

glider3560 said:

Where you accidentally pay into two ISAs in one year, the ISA manager can reverse the subscription (payment in) to "repair" the ISA.  It's simple with Cash ISAs, but with S&S you'll have to sell investments to cover the refund if there isn't enough cash in the account.

In cases where the investor subscribes to a disallowed combination of ISAs, this is always handled by HMRC through a notice of discovery after the end of the tax year in question using information submitted by ISA managers in their annual returns. It is possible that the decision would be that the Vanguard S&S ISA is repairable to the extent the overall subscription limit had not been exceeded (i.e. no money is removed from either ISA), but it is also possible that the Vanguard ISA could be considered ineligible for repair and is instead voided. There are provisions for both courses of action and the set of worked examples provided by HMRC only covers the case where two different cash ISAs are subscribed to in the same tax year. Transgressions involving cash ISAs tend to be dealt with more leniently, as are those in which the overall subscription limit is not breached.

Its important to note that "repair" refers to the ISA subscriptions being made valid in this context, what you describe (removal of some of the subscriptions) is known as "partial repair" and is always made to the second ISA of a particular type to be subscribed to in the tax year in question. There are no circumstances where the valid £150 subscription paid into the Santander account would be subject to repair, partial or otherwise.

Transferring the current year subscriptions from Santander to Vanguard would seem a no brainer in this situation.

Oneday77

eskbanker said:

Oneday77 said:

The Santander S&S is in their own fund. So by volatile, I rightly or wrongly, assumed it would be 'cashed' out. Where it could sell on a dip and buy on a high. Though I do recognise that it'll probably have little relevance in the current market.

The markets themselves are indeed relatively volatile at the moment but in the context of an investment of £150 that's currently hindering you from investing how you intend to for the next 364 days, a change of a few quid either way is hardly going to be life-changing!

Thanks, I wasn't fretting over the £150. In fact it's not even invested yet it's sitting as cash.

It was more last years £4k that i was wondering over the volatility. I know in the grand scheme of this is small change to some ad will be over time. I don't want to start off mesing it up so early.

masonic said:

glider3560 said:

Where you accidentally pay into two ISAs in one year, the ISA manager can reverse the subscription (payment in) to "repair" the ISA.  It's simple with Cash ISAs, but with S&S you'll have to sell investments to cover the refund if there isn't enough cash in the account.

In cases where the investor subscribes to a disallowed combination of ISAs, this is always handled by HMRC through a notice of discovery after the end of the tax year in question using information submitted by ISA managers in their annual returns. It is possible that the decision would be that the Vanguard S&S ISA is repairable to the extent the overall subscription limit had not been exceeded (i.e. no money is removed from either ISA), but it is also possible that the Vanguard ISA could be considered ineligible for repair and is instead voided. There are provisions for both courses of action and the set of worked examples provided by HMRC only covers the case where two different cash ISAs are subscribed to in the same tax year. Transgressions involving cash ISAs tend to be dealt with more leniently, as are those in which the overall subscription limit is not breached.

Its important to note that "repair" refers to the ISA subscriptions being made valid in this context, what you describe (removal of some of the subscriptions) is known as "partial repair" and is always made to the second ISA of a particular type to be subscribed to in the tax year in question. There are no circumstances where the valid £150 subscription paid into the Santander account would be subject to repair, partial or otherwise.

Transferring the current year subscriptions from Santander to Vanguard would seem a no brainer in this situation.

Looks like transferring this years to Vanguard is the right thing to do. The fact it's still in cash should help speed it along.

Would I be right in saying I can add more to the new Vanguard account while I wait for the transfer to complete? Seems obvious but not sure how the transfer account works during the process.

Thanks to everyone for their replies.

colsten

Oneday77 said

Would I be right in saying I can add more to the new Vanguard account while I wait for the transfer to complete? Seems obvious but not sure how the transfer account works during the process.

No, you need to wait for the transfer to complete.

Otherwise you would have funded more than one S&S ISA in 2020-21. The transfer "erases" your deposit into the Santander account, and your 2020-21 S&S ISA will be the Vanguard one. You can deposit another £19,850 into it after your transfer of the £150 has completed.

masonic

Oneday77 said:

Looks like transferring this years to Vanguard is the right thing to do. The fact it's still in cash should help speed it along.

Would I be right in saying I can add more to the new Vanguard account while I wait for the transfer to complete? Seems obvious but not sure how the transfer account works during the process.

A cash transfer would generally take just 2-3 weeks, although the current Covid situation might add extra delays. It would be best to wait until this is complete, but Vanguard might be relaxed about letting you top up once they have accepted the transfer and are just waiting on the funds to be sent across - you could try asking.

colsten

masonic said:

Oneday77 said:

Looks like transferring this years to Vanguard is the right thing to do. The fact it's still in cash should help speed it along.

Would I be right in saying I can add more to the new Vanguard account while I wait for the transfer to complete? Seems obvious but not sure how the transfer account works during the process.

A cash transfer would generally take just 2-3 weeks, although the current Covid situation might add extra delays. It would be best to wait until this is complete, but Vanguard might be relaxed about letting you top up once they have accepted the transfer and are just waiting on the funds to be sent across - you could try asking.

I doubt Vanguard would check anything over and above that you don't deposit more than £20,000 with them (incl any completed transfers-in of current year money). They have no means to verify how much you deposited with other providers, not even if you tell them. It's HMRC you would need to ask. However, for the sake of a few days, it seems hardly worth the hassle, and HMRC would very likely just tell you what you have already been told - i.e. request the transfer of your £150 and take it from there once the transfer is done.