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

sandeepamar

masonic said:

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.

Agreed.   May I ask another question....At the start of this coming new tax year if I subscribe to a new S&S ISA at ii, and mirror the purchases in my current invalid ISA, (and I only stick to one ISA provider this time), I presume the new tax year subscription is protected from my previous error and almost considered a separate entity, would that be correct?

masonic

sandeepamar said:

masonic said:

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.

Agreed.   May I ask another question....At the start of this coming new tax year if I subscribe to a new S&S ISA at ii, and mirror the purchases in my current invalid ISA, (and I only stick to one ISA provider this time), I presume the new tax year subscription is protected from my previous error and almost considered a separate entity, would that be correct?

Yes, HMRC treats different tax years as different accounts. It would be best if you avoid any trading that would make it difficult to determine which holdings belong to which tax year. Just subscribing more cash and using that cash to buy more shares will keep things simple (so you will have X shares in Company Z belonging to the 2020/21 tax year account, and Y shares in Company Z belonging to the 2021/22 tax year account, etc).

sandeepamar

Really can't thank you enough for your time, effort and patience.  It's definitely helped me choose a strategy going forward, which is one of hope, hope for leniency and to not complicate matters.   Once I hear from HMRC and the action they propose, I'll be sure to let you know.  Wishing you a healthy and happy year ahead.
Kindest Regards

sandeepamar

masonic said:

sandeepamar said:

masonic said:

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.

Agreed.   May I ask another question....At the start of this coming new tax year if I subscribe to a new S&S ISA at ii, and mirror the purchases in my current invalid ISA, (and I only stick to one ISA provider this time), I presume the new tax year subscription is protected from my previous error and almost considered a separate entity, would that be correct?

Yes, HMRC treats different tax years as different accounts. It would be best if you avoid any trading that would make it difficult to determine which holdings belong to which tax year. Just subscribing more cash and using that cash to buy more shares will keep things simple (so you will have X shares in Company Z belonging to the 2020/21 tax year account, and Y shares in Company Z belonging to the 2021/22 tax year account, etc).

Really can't thank you enough for your time, effort and patience.  It's definitely helped me choose a strategy going forward, which is one of hope, hope for leniency and to not complicate matters.   Once I hear from HMRC and the action they propose, I'll be sure to let you know.  Wishing you a healthy and happy year ahead.
Kindest Regards

Jhindle02

Heard anything from the HMRC? I’m in a similar situation so it would be nice to know.

Albermarle

Jhindle02 said:

Heard anything from the HMRC? I’m in a similar situation so it would be nice to know.

There are two other later threads on the savings and investments board from the same OP.

masonic

Jhindle02 said:

Heard anything from the HMRC? I’m in a similar situation so it would be nice to know.

If you want to delve into history, ask Nardge: https://forums.moneysavingexpert.com/discussion/comment/75415622/#Comment_75415622
I believe he still hasn't heard from HMRC, 2.5 years later.

dunstonh

Jhindle02 said:

Heard anything from the HMRC? I’m in a similar situation so it would be nice to know.

At the tax ear end, providers notify HMRC of ISA use.   It can be another 18 months after that for HMRC act on it depending on their current workloads.