Accidentally Contributed £20001 to ISAs this year

Rheumatoid

I placed £2800 into a Vanguard S&S ISA earlier in this tax year
I sent a test payment of £1 into a Virgin 2 yr fix cash ISA a couple of days ago.
Without thinking I have just transferred £17200 into the Virgin ISA
What are the implications of this? Do I need to do anything / tell anyone if its only £1?
Thanks

lohr500

Personally I wouldn't be too worried over £1, but I guess you could contact Virgin and ask them if they can reverse out the £1 test payment. 

This link would suggest you are unlikely to go to jail 👍

https://www.wealthify.com/blog/what-you-need-to-know-about-your-isa-allowance

beefturnmail

20 years I should think

Rheumatoid

If I do go to jail the energy savings at home will probably be better than the interest on the ISA so not all bad.

masonic

You could flexibly withdraw £1 from Vanguard if you have a cash balance.

cricidmuslibale

Rheumatoid said:

I placed £2800 into a Vanguard S&S ISA earlier in this tax year
I sent a test payment of £1 into a Virgin 2 yr fix cash ISA a couple of days ago.
Without thinking I have just transferred £17200 into the Virgin ISA
What are the implications of this? Do I need to do anything / tell anyone if its only £1?
Thanks

With a very small overpayment like this, either HMRC will not work out that you have (obviously accidentally) overpaid in total by just £1, or they will realise that you have done so but then either choose to overlook it because it is such a 'minor offence' or let you off as a first time 'offender' with a written warning. It is very unlikely indeed that they will require you to pay tax on the extra £1 because it would literally be a matter of a few pence in tax, and it would cost more for them to collect it than you would be actually paying them!

I should think that many other people have also accidentally overpaid by £1 in total into their ISA(s) over the years due to sending a £1 test payment and then forgetting to include it within the total ISA allowance (now £20,000 max) that is/was permitted.

masonic

cricidmuslibale said:

Rheumatoid said:

I placed £2800 into a Vanguard S&S ISA earlier in this tax year
I sent a test payment of £1 into a Virgin 2 yr fix cash ISA a couple of days ago.
Without thinking I have just transferred £17200 into the Virgin ISA
What are the implications of this? Do I need to do anything / tell anyone if its only £1?
Thanks

With a very small overpayment like this, either HMRC will not work out that you have (obviously accidentally) overpaid in total by just £1, or they will realise that you have done so but then either choose to overlook it because it is such a 'minor offence' or let you off as a first time 'offender' with a written warning. It is very unlikely indeed that they will require you to pay tax on the extra £1 because it would literally be a matter of a few pence in tax, and it would cost more for them to collect it than you would be actually paying them!

I should think that many other people have also accidentally overpaid by £1 in total into their ISA(s) over the years due to sending a £1 test payment and then forgetting to include it within the total ISA allowance (now £20,000 max) that is/was permitted.

Should they decide to throw the book at the OP, the action they will take will be to instruct Virgin to remove the £1, alongside reporting the pennies of interest as taxable interest. Unlikely to happen, though, but loss of the get out of jail free card is a distinct possibility. I'd hate to have to play that card for such a trivial matter.

Given reports from those who have made far more substantial errors not being contacted at all several years after the event, I do wonder whether HMRC has even been checking on this.

cricidmuslibale

masonic said:

cricidmuslibale said:

Rheumatoid said:

I placed £2800 into a Vanguard S&S ISA earlier in this tax year
I sent a test payment of £1 into a Virgin 2 yr fix cash ISA a couple of days ago.
Without thinking I have just transferred £17200 into the Virgin ISA
What are the implications of this? Do I need to do anything / tell anyone if its only £1?
Thanks

With a very small overpayment like this, either HMRC will not work out that you have (obviously accidentally) overpaid in total by just £1, or they will realise that you have done so but then either choose to overlook it because it is such a 'minor offence' or let you off as a first time 'offender' with a written warning. It is very unlikely indeed that they will require you to pay tax on the extra £1 because it would literally be a matter of a few pence in tax, and it would cost more for them to collect it than you would be actually paying them!

I should think that many other people have also accidentally overpaid by £1 in total into their ISA(s) over the years due to sending a £1 test payment and then forgetting to include it within the total ISA allowance (now £20,000 max) that is/was permitted.

Should they decide to throw the book at the OP, the action they will take will be to instruct Virgin to remove the £1, alongside reporting the pennies of interest as taxable interest. Unlikely to happen, though, but loss of the get out of jail free card is a distinct possibility. I'd hate to have to play that card for such a trivial matter.

Given reports from those who have made far more substantial errors not being contacted at all several years after the event, I do wonder whether HMRC has even been checking on this.

Re: your 1st paragraph above:- That's a very fair point, actually. One may need that 1 get out of jail free card that HMRC tend to allow for a later, again accidental, but more substantial overpayment. It may therefore be best for the OP to ask Virgin or Vanguard to remove the extra £1 just to be entirely on the safe side for the future.

Rheumatoid

I have asked Virgin to give me my quid back. If they are not keen I will phone HMRC and fess up.

Rheumatoid

masonic said:

You could flexibly withdraw £1 from Vanguard if you have a cash balance.

Sorry, had missed this. That would be easy if its legit - does it have to be a flexible ISA to do it? Will wait on virgin's response and withdraw from VG if Virgin not cooperative.

EDIT:
Looks like it is anyway

"The Vanguard ISA is a “flexible” ISA, which means that, while it remains open (and subject to certain exceptions noted in Vanguard’s Client Terms), money you withdraw may be paid back in during the same tax year without counting towards your annual ISA allowance. A payment into your ISA will first be treated as a repayment of a previous withdrawal in the same tax year, if applicable"

dunstonh

Every NI number gets one get out of jail free card with ISAs.  Do nothing and in about 2 years time HMRC will contact you to smack your backside and tell you not to do it again but take no other action.