ISA overpayment by mistake

mc1982_2

hello,

I have a problem with ISA, I misunderstood that new allowance started around 6th of April, so the 1st of April I added (wrongly) a 1100 pounds more over the maximum limit (two cash ISA in two different institutions). What is the procedure there. I spent last week trying to talk with HRMC, but it is impossible to have the line. I manage to speak with someone in a chat, they just say to leave it like that and wait for their notification if they spot the issue. do you think it is correct?
I am a bit surpirsed that there is no mechanism to flag it immediately
Thanks

refluxer

mc1982_2 said:

I have a problem with ISA, I misunderstood that new allowance started around 6th of April, so the 1st of April I added (wrongly) a 1100 pounds more over the maximum limit (two cash ISA in two different institutions). 

I can't comment on the procedure needed to correct your mistake but it's probably worth pointing out that you've also potentially broken ISA rules by paying into two different cash ISAs in the same tax year, unless they were both part of an ISA 'portfolio' that a few banks and building societies offer which allow this ? Just something to bear in mind for the future if not.

eskbanker

Yes, HMRC are correct, there's nothing that you can do about this situation at the moment and just have to let things take their course - once they pick up on the error from the submissions they'll receive from the two providers then they'll decide if any action is necessary, but that would be many months away.

Is the issue that you exceeded the annual £20K limit or that you funded two different cash ISAs in the same tax year, or both?

twopenny

I'm going back to the past when I paid too early into my ISA (just the one) and was told it would sit there but with no interest until the year started.

Yes it was months before I heard anything and it was barely a note to say no tax was due.

But that was the past........

Also for very small amounts it was a case that it wasn't worth all the paperwork on a small amount from the tax office. Could be different now its all computerised but I doubt it.

mc1982_2

Thank you for your help. 
I guess the mistake is double two cash isa of the same type in the same year and passed the limit of 1100 pounds.

Thanks for the help

eskbanker

mc1982_2 said:

I guess the mistake is double two cash isa of the same type in the same year and passed the limit of 1100 pounds.

HMRC are usually quite forgiving to 'first offenders', but they might regard this as two separate breaches - theoretically they can insist that the second ISA that you paid into is declared void and/or that excess subscriptions are treated as taxable.  However, as above, now that we've moved on to a new tax year, it's too late to take any action yourself and you'll just have to wait and see what, if anything, they choose to do....

TiVo_Lad

I've generally found HMRC to be quite pragmatic. You're a first time offender and it's tax on interest on £1100. By the time you add in print and postage costs and then processing the payment, it almost certainly falls into the "not worth it" bucket. There are many bigger fish on HMRC's radar. I'd not worry about it and deal with any fallout if a brown envelope drops on the mat...