Accidentally Contributed £20001 to ISAs this year

isasmurf

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

If informed of an over-subscription by the customer ISA providers are advised by HMRC not to take action themselves and to inform them that HMRC may be in contact in due course. Even if Virgin give you it back, it will still be reported as a subscription made and you would still have over-subscribed. 

Contacting HMRC now will do nothing other than perhaps give you some reassurance. They will just tell you they may be in contact after the end of the tax year (well after the end of the tax year). They will take no action until they've got all the data and run their compliance programme - usually in the autumn/winter after the end of the tax year. 

Have a read of the section 'ISA repair – valid combination of ISAs but overall subscription limit exceeded' in https://www.gov.uk/guidance/close-void-or-repair-an-isa-if-youre-an-isa-manager#repair-void for what will happen if HMRC do anything. 

If that worries you please have a read of this blog by someone involved in managing ISAs where they give their experience of first time oversubscriptions: What if I oversubscribe my ISA account

masonic

Rheumatoid said:

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"

Yes, Vanguard's ISA is flexible, so it is an easy solution that will result in you having subscribed £20k overall. ISA managers do not report to HMRC in sufficient detail that the exact sequence of transactions could be examined, so the fact your combined subscriptions went over £20k for a short period of time is not going to be picked up. Importantly it leaves you free to make a future mistake with impunity.

Virgin cannot do anything useful, so it would be unwise to contact them - fixed ISAs are almost never flexible. As mentioned by isasmurf, they have been instructed by HMRC not to intervene when these situations arise, as they may not be in possession of all of the facts.

Rheumatoid

Thanks all. Have taken £1 out of VG. I will see if Virgin respond in any way but will just leave as is whether they give me a quid back or not.

Rheumatoid

VG now says "You have £17,201.00 remaining of
your 2022/23 ISA allowance"
So presume all good now

Compound_2

In these types of situations, another option might be to exercise 14 day cooling off period. This annuls all subscriptions to new ISA without penalty, regaining the right to open new account with proper allowance.

Rheumatoid

Compound_2 said:

In these types of situations, another option might be to exercise 14 day cooling off period. This annuls all subscriptions to new ISA without penalty, regaining the right to open new account with proper allowance.

In normal times maybe but the rate on the account I opened is now a fair bit lower and so are most of the other options. Thanks anyway.