HELP needed... I subscribed to two Stocks and Shares ISA in the same year.

masonic

I have an II S&S ISA. It is not flexible. Neither is the HL one (I'm fairly sure).

So you have subscribed to two S&S ISAs in the same tax year and breached the annual allowance. Under those circumstances, if you have paid new money into the HL S&S ISA in this tax year and after that opened and paid into the II S&S ISA, I would be inclined to top up the HL ISA to £20k and brace for HMRC's intervention in due course. I doubt the action taken will be any different, and you will have preserved your allowance.

sandeepamar

masonic said:

I have an II S&S ISA. It is not flexible. Neither is the HL one (I'm fairly sure).

So you have subscribed to two S&S ISAs in the same tax year and breached the annual allowance. Under those circumstances, if you have paid new money into the HL S&S ISA in this tax year and after that opened and paid into the II S&S ISA, I would be inclined to top up the HL ISA to £20k and brace for HMRC's intervention in due course. I doubt the action taken will be any different, and you will have preserved your allowance.

That really helps and i'm inclined to agree.  Yes H&L got the first of the new money this year.   I will go ahead and top H&L to the max allowance and wait for HMRC to advise.  This brings a question to mind regarding the ii ISA----- let's say it takes several months into the new tax year or even longer for HMRC to contact me, will they only be concerned with gains arising from this tax year, so maybe i can leave the ii ISA intact or will it be considered a trading account even in the new tax year ahead?  That's a confusing question, apologies.  If I am going to top up H&L, it makes sense to transfer the ii ISA to my ii trading account before this tax year is up, don't you think?  That way I can Bed and Isa immediately in the new tax year april 2021?  What do you think?  I'm envisaging some gains here, hence my scenario thinking......  

masonic

sandeepamar said:

masonic said:

I have an II S&S ISA. It is not flexible. Neither is the HL one (I'm fairly sure).

So you have subscribed to two S&S ISAs in the same tax year and breached the annual allowance. Under those circumstances, if you have paid new money into the HL S&S ISA in this tax year and after that opened and paid into the II S&S ISA, I would be inclined to top up the HL ISA to £20k and brace for HMRC's intervention in due course. I doubt the action taken will be any different, and you will have preserved your allowance.

That really helps and i'm inclined to agree.  Yes H&L got the first of the new money this year.   I will go ahead and top H&L to the max allowance and wait for HMRC to advise.  This brings a question to mind regarding the ii ISA----- let's say it takes several months into the new tax year or even longer for HMRC to contact me, will they only be concerned with gains arising from this tax year, so maybe i can leave the ii ISA intact or will it be considered a trading account even in the new tax year ahead?  That's a confusing question, apologies.  If I am going to top up H&L, it makes sense to transfer the ii ISA to my ii trading account before this tax year is up, don't you think?  That way I can Bed and Isa immediately in the new tax year april 2021?  What do you think?  I'm envisaging some gains here, hence my scenario thinking......  

If the ISA is voided, then it will be treated as never having been an ISA. The acquisition price of the shares within the ISA will be used for CGT calculations and any income received would be taxable.

It is not clear to me what II is proposing. If they are suggesting they will close the ISA and move the shares into the trading account without selling them then that would leave you in the same position as if you had originally bought them in the trading account. Bed and ISA will cost you about £250, assuming fees stay the same, as you'll only pay one set of trading fees. You will not be able to calculate your capital gains at that point, as the acquisition price would depend on the action HMRC chooses to take, unless you are cancelling the ISA within a cooling off period.

If you do nothing, then ISA retains its tax benefits unless and until HMRC says otherwise, and it is possible no Bed & ISA will be needed.

If the shares sky-rocket in value such that you can't put them all back into an ISA within one tax year, then I'd file that under 'nice problem to have'.

ISA providers are explicitly advised by HMRC that they "...should not take it upon themselves to advise customers as they may not be in possession of all of the relevant facts, or be certain of the action that HMRC will take."

sandeepamar

I am definitely beyond the cooling off period.   ii merely pointed out that a Bed and ISA option exists if need be but they were not offering a solution and will be guided by HMRC.   I guess I am preempting, I would like very much for my current ii stocks to be in my ISA for the next tax year and not knowing how long HMRC will take could waste a lot of time and opportunity.  Other than purchasing the same stocks all over again in the new tax year, i'm not quite sure how to proceed, any thoughts on that?  I presume a gain cannot be calculated until the stocks are actually sold, in which case HMRC will request sale of the stocks.  By transferring them into the Trading account, the ISA at this end of tax year is empty and at the point of Bed and ISA (start of new tax year), a sale of the trading stocks (previously ISA stocks) has to be made to transfer the stocks to the new tax year ISA, i guess that would be a possible point for calculation of gain for tax purposes?  This rule is quite something.  I appreciate having to pay the gain for a mistake i made but I wish that that the logistics were clear and simple.  I really must thank you for your time and effort here, feels like therapy.....  Any more thoughts are very welcome 

sandeepamar

masonic said:

sandeepamar said:

masonic said:

I have an II S&S ISA. It is not flexible. Neither is the HL one (I'm fairly sure).

So you have subscribed to two S&S ISAs in the same tax year and breached the annual allowance. Under those circumstances, if you have paid new money into the HL S&S ISA in this tax year and after that opened and paid into the II S&S ISA, I would be inclined to top up the HL ISA to £20k and brace for HMRC's intervention in due course. I doubt the action taken will be any different, and you will have preserved your allowance.

That really helps and i'm inclined to agree.  Yes H&L got the first of the new money this year.   I will go ahead and top H&L to the max allowance and wait for HMRC to advise.  This brings a question to mind regarding the ii ISA----- let's say it takes several months into the new tax year or even longer for HMRC to contact me, will they only be concerned with gains arising from this tax year, so maybe i can leave the ii ISA intact or will it be considered a trading account even in the new tax year ahead?  That's a confusing question, apologies.  If I am going to top up H&L, it makes sense to transfer the ii ISA to my ii trading account before this tax year is up, don't you think?  That way I can Bed and Isa immediately in the new tax year april 2021?  What do you think?  I'm envisaging some gains here, hence my scenario thinking......  

If the ISA is voided, then it will be treated as never having been an ISA. The acquisition price of the shares within the ISA will be used for CGT calculations and any income received would be taxable.

It is not clear to me what II is proposing. If they are suggesting they will close the ISA and move the shares into the trading account without selling them then that would leave you in the same position as if you had originally bought them in the trading account. Bed and ISA will cost you about £250, assuming fees stay the same, as you'll only pay one set of trading fees. You will not be able to calculate your capital gains at that point, as the acquisition price would depend on the action HMRC chooses to take, unless you are cancelling the ISA within a cooling off period.

If you do nothing, then ISA retains its tax benefits unless and until HMRC says otherwise, and it is possible no Bed & ISA will be needed.

If the shares sky-rocket in value such that you can't put them all back into an ISA within one tax year, then I'd file that under 'nice problem to have'.

ISA providers are explicitly advised by HMRC that they "...should not take it upon themselves to advise customers as they may not be in possession of all of the relevant facts, or be certain of the action that HMRC will take."

I am definitely beyond the cooling off period.   ii merely pointed out that a Bed and ISA option exists if need be but they were not offering a solution and will be guided by HMRC.   I guess I am preempting, I would like very much for my current ii stocks to be in my ISA for the next tax year and not knowing how long HMRC will take could waste a lot of time and opportunity.  Other than purchasing the same stocks all over again in the new tax year, i'm not quite sure how to proceed, any thoughts on that?  I presume a gain cannot be calculated until the stocks are actually sold, in which case HMRC will request sale of the stocks.  By transferring them into the Trading account, the ISA at this end of tax year is empty and at the point of Bed and ISA (start of new tax year), a sale of the trading stocks (previously ISA stocks) has to be made to transfer the stocks to the new tax year ISA, i guess that would be a possible point for calculation of gain for tax purposes?  This rule is quite something.  I appreciate having to pay the gain for a mistake i made but I wish that that the logistics were clear and simple.  I really must thank you for your time and effort here, feels like therapy.....  Any more thoughts are very welcome 

masonic

sandeepamar said:

I am definitely beyond the cooling off period.   ii merely pointed out that a Bed and ISA option exists if need be but they were not offering a solution and will be guided by HMRC.   I guess I am preempting, I would like very much for my current ii stocks to be in my ISA for the next tax year and not knowing how long HMRC will take could waste a lot of time and opportunity.

I don't think ii is at liberty to take the investments outside of the ISA without selling them, except under cooling off or HMRC instructions. Perhaps they were proposing some kind of reverse Bed & ISA, with the possibility of gains being taxable if HMRC later comes along and voids the ISA. It might therefore cost you £250 now, then another £250 to Bed & ISA in the next tax year.

sandeepamar said:

Other than purchasing the same stocks all over again in the new tax year, i'm not quite sure how to proceed, any thoughts on that?  I presume a gain cannot be calculated until the stocks are actually sold, in which case HMRC will request sale of the stocks.  By transferring them into the Trading account, the ISA at this end of tax year is empty and at the point of Bed and ISA (start of new tax year), a sale of the trading stocks (previously ISA stocks) has to be made to transfer the stocks to the new tax year ISA, i guess that would be a possible point for calculation of gain for tax purposes?  This rule is quite something.  I appreciate having to pay the gain for a mistake i made but I wish that that the logistics were clear and simple.  I really must thank you for your time and effort here, feels like therapy.....  Any more thoughts are very welcome 

If HMRC decides to void the ISA, then the investments will not need to be sold. The acquisition price will be taken as the price you bought them in the ISA and you will crystallise a gain only when you sell them or Bed & ISA them.

If you let ii remove them from the ISA, the acquisition price will be unknown. It might be the price at which they are bought back outside the ISA (if the ISA is never voided), or it might be the price they were bought within the ISA (if the ISA is subsequently voided, under the bed & breakfast rule). So you could be paying £250 to sell and repurchase outside the ISA and another £250 for an unnecessary Bed & ISA, or (more likely) you could be paying £250 to sell and repurchase outside the ISA when the ISA wrapper will be removed free of charge under HMRC's instruction.

If ii really can transfer the investments out of the ISA without charge, then it makes the option more palatable, but you still miss out on the possibility of leniency. But if they move out of the ISA and are not sold and repurchased, and the ISA is never voided, then you will have no evidence of what they were worth when they moved outside of the ISA, which could be quite problematic (hence I don't think such a transfer is possible).

sandeepamar

masonic said:

sandeepamar said:

I am definitely beyond the cooling off period.   ii merely pointed out that a Bed and ISA option exists if need be but they were not offering a solution and will be guided by HMRC.   I guess I am preempting, I would like very much for my current ii stocks to be in my ISA for the next tax year and not knowing how long HMRC will take could waste a lot of time and opportunity.

I don't think ii is at liberty to take the investments outside of the ISA without selling them, except under cooling off or HMRC instructions. Perhaps they were proposing some kind of reverse Bed & ISA, with the possibility of gains being taxable if HMRC later comes along and voids the ISA. It might therefore cost you £250 now, then another £250 to Bed & ISA in the next tax year.

sandeepamar said:

Other than purchasing the same stocks all over again in the new tax year, i'm not quite sure how to proceed, any thoughts on that?  I presume a gain cannot be calculated until the stocks are actually sold, in which case HMRC will request sale of the stocks.  By transferring them into the Trading account, the ISA at this end of tax year is empty and at the point of Bed and ISA (start of new tax year), a sale of the trading stocks (previously ISA stocks) has to be made to transfer the stocks to the new tax year ISA, i guess that would be a possible point for calculation of gain for tax purposes?  This rule is quite something.  I appreciate having to pay the gain for a mistake i made but I wish that that the logistics were clear and simple.  I really must thank you for your time and effort here, feels like therapy.....  Any more thoughts are very welcome 

If HMRC decides to void the ISA, then the investments will not need to be sold. The acquisition price will be taken as the price you bought them in the ISA and you will crystallise a gain only when you sell them or Bed & ISA them.

If you let ii remove them from the ISA, the acquisition price will be unknown. It might be the price at which they are bought back outside the ISA (if the ISA is never voided), or it might be the price they were bought within the ISA (if the ISA is subsequently voided, under the bed & breakfast rule). So you could be paying £250 to sell and repurchase outside the ISA and another £250 for an unnecessary Bed & ISA, or (more likely) you could be paying £250 to sell and repurchase outside the ISA when the ISA wrapper will be removed free of charge under HMRC's instruction.

If ii really can transfer the investments out of the ISA without charge, then it makes the option more palatable, but you still miss out on the possibility of leniency. But if they move out of the ISA and are not sold and repurchased, and the ISA is never voided, then you will have no evidence of what they were worth when they moved outside of the ISA, which could be quite problematic (hence I don't think such a transfer is possible).

OK, thank you.  I did think leniency was off the table as things currently stand?  And even more so if I top up the H&L?

masonic

sandeepamar said:

masonic said:

sandeepamar said:

I am definitely beyond the cooling off period.   ii merely pointed out that a Bed and ISA option exists if need be but they were not offering a solution and will be guided by HMRC.   I guess I am preempting, I would like very much for my current ii stocks to be in my ISA for the next tax year and not knowing how long HMRC will take could waste a lot of time and opportunity.

I don't think ii is at liberty to take the investments outside of the ISA without selling them, except under cooling off or HMRC instructions. Perhaps they were proposing some kind of reverse Bed & ISA, with the possibility of gains being taxable if HMRC later comes along and voids the ISA. It might therefore cost you £250 now, then another £250 to Bed & ISA in the next tax year.

sandeepamar said:

Other than purchasing the same stocks all over again in the new tax year, i'm not quite sure how to proceed, any thoughts on that?  I presume a gain cannot be calculated until the stocks are actually sold, in which case HMRC will request sale of the stocks.  By transferring them into the Trading account, the ISA at this end of tax year is empty and at the point of Bed and ISA (start of new tax year), a sale of the trading stocks (previously ISA stocks) has to be made to transfer the stocks to the new tax year ISA, i guess that would be a possible point for calculation of gain for tax purposes?  This rule is quite something.  I appreciate having to pay the gain for a mistake i made but I wish that that the logistics were clear and simple.  I really must thank you for your time and effort here, feels like therapy.....  Any more thoughts are very welcome 

If HMRC decides to void the ISA, then the investments will not need to be sold. The acquisition price will be taken as the price you bought them in the ISA and you will crystallise a gain only when you sell them or Bed & ISA them.

If you let ii remove them from the ISA, the acquisition price will be unknown. It might be the price at which they are bought back outside the ISA (if the ISA is never voided), or it might be the price they were bought within the ISA (if the ISA is subsequently voided, under the bed & breakfast rule). So you could be paying £250 to sell and repurchase outside the ISA and another £250 for an unnecessary Bed & ISA, or (more likely) you could be paying £250 to sell and repurchase outside the ISA when the ISA wrapper will be removed free of charge under HMRC's instruction.

If ii really can transfer the investments out of the ISA without charge, then it makes the option more palatable, but you still miss out on the possibility of leniency. But if they move out of the ISA and are not sold and repurchased, and the ISA is never voided, then you will have no evidence of what they were worth when they moved outside of the ISA, which could be quite problematic (hence I don't think such a transfer is possible).

OK, thank you.  I did think leniency was off the table as things currently stand?  And even more so if I top up the H&L?

I don't think it is off the table. It is the less likely outcome, but possible.

sandeepamar

masonic said:

sandeepamar said:

masonic said:

sandeepamar said:

I am definitely beyond the cooling off period.   ii merely pointed out that a Bed and ISA option exists if need be but they were not offering a solution and will be guided by HMRC.   I guess I am preempting, I would like very much for my current ii stocks to be in my ISA for the next tax year and not knowing how long HMRC will take could waste a lot of time and opportunity.

I don't think ii is at liberty to take the investments outside of the ISA without selling them, except under cooling off or HMRC instructions. Perhaps they were proposing some kind of reverse Bed & ISA, with the possibility of gains being taxable if HMRC later comes along and voids the ISA. It might therefore cost you £250 now, then another £250 to Bed & ISA in the next tax year.

sandeepamar said:

Other than purchasing the same stocks all over again in the new tax year, i'm not quite sure how to proceed, any thoughts on that?  I presume a gain cannot be calculated until the stocks are actually sold, in which case HMRC will request sale of the stocks.  By transferring them into the Trading account, the ISA at this end of tax year is empty and at the point of Bed and ISA (start of new tax year), a sale of the trading stocks (previously ISA stocks) has to be made to transfer the stocks to the new tax year ISA, i guess that would be a possible point for calculation of gain for tax purposes?  This rule is quite something.  I appreciate having to pay the gain for a mistake i made but I wish that that the logistics were clear and simple.  I really must thank you for your time and effort here, feels like therapy.....  Any more thoughts are very welcome 

If HMRC decides to void the ISA, then the investments will not need to be sold. The acquisition price will be taken as the price you bought them in the ISA and you will crystallise a gain only when you sell them or Bed & ISA them.

If you let ii remove them from the ISA, the acquisition price will be unknown. It might be the price at which they are bought back outside the ISA (if the ISA is never voided), or it might be the price they were bought within the ISA (if the ISA is subsequently voided, under the bed & breakfast rule). So you could be paying £250 to sell and repurchase outside the ISA and another £250 for an unnecessary Bed & ISA, or (more likely) you could be paying £250 to sell and repurchase outside the ISA when the ISA wrapper will be removed free of charge under HMRC's instruction.

If ii really can transfer the investments out of the ISA without charge, then it makes the option more palatable, but you still miss out on the possibility of leniency. But if they move out of the ISA and are not sold and repurchased, and the ISA is never voided, then you will have no evidence of what they were worth when they moved outside of the ISA, which could be quite problematic (hence I don't think such a transfer is possible).

OK, thank you.  I did think leniency was off the table as things currently stand?  And even more so if I top up the H&L?

I don't think it is off the table. It is the less likely outcome, but possible.

Morning, 
I just checked my H&L ISA and my ii ISA remaining balances to invest .  As i'm sure you're aware, both accounts highlight remaining allowances.  ii remaining is £8,550 (therefore £11,450 invested),  H&L remaining is £11,550 (therefore £8450 invested).    This totals £19,900 invested, (my ii ISA also shows a zero cash balance).  Yo may remember me saying that I had gone over by a couple of hundred pounds and transferred it to my trading account immediately...... the balances suggest the little extra did not trigger my ISA, maybe by the time the money cleared my bank etc, it was already in my trading.  This suggests that I haven't exceeded the £20,000 limit and my only issue is more than one subscription for the year.  On this basis, hoping for leniency I'm thinking to buy whatever i need in my trading account and come the new tax year bed and isa.  The invalid ii ISA I will potentially leave as is and wait for HMRC instruction.  I read somewhere that if the account is deemed as invalid and they choose to void/repair it, that all transactions and gains in that invalid ISA are treated as if being in a trading account up till I receive a letter from HMRC.  So if i get a letter in September 2021, any gain in the 5 months of the new tax year are taxable, (after CGT allowances). Does that seems about right to you?

Do you think that's a good strategy or better to max out H&L and clearly trigger action from HMRC?  You seem incredibly knowledgeable about this stuff and I know you can't predict what will happen but i'm very happy to hear your approach.  
Thank you

masonic

sandeepamar said:

I read somewhere that if the account is deemed as invalid and they choose to void/repair it, that all transactions and gains in that invalid ISA are treated as if being in a trading account up till I receive a letter from HMRC.  So if i get a letter in September 2021, any gain in the 5 months of the new tax year are taxable, (after CGT allowances). Does that seems about right to you?

You can read all about it here: https://www.gov.uk/guidance/close-void-or-repair-an-isa-if-youre-an-isa-manager

In essence anything that is allowed to remain in the ISA will be treated as being taxable up to the date of the repair, and anything that must be removed from the ISA will be treated as never having been in the ISA. If they void the ISA then everything is taxable. I think that only disposals made prior to the repair are subject to CGT (i.e. gains in value of investments that are held on the date of repair are not subject to a Bed&ISA-like disposal triggering CGT), though that isn't made clear. They really have three choices: void, repair or turn a blind eye. They obviously don't publicise their ability to do the last one.

sandeepamar said:

Do you think that's a good strategy or better to max out H&L and clearly trigger action from HMRC?  You seem incredibly knowledgeable about this stuff and I know you can't predict what will happen but i'm very happy to hear your approach. 

Given that you now believe the overall subscription limit was not breached (the remaining allowance calculations do support that), then I agree it is better not to deliberately exceed the limit now as your chances of leniency are greater when it is just an invalid combination of ISAs. I can recall someone posting that they were let off for subscribing to 2 S&S ISAs in the same tax year, although it can't be guaranteed you'll be as lucky. There have been several instances of people subscribing to 2 cash ISAs being let off for their first offence.