subscribed to 2 ISA accounts in this tax year by mistake

masonic

It seems from my reading that the only way to resolve this without penalty is to do nothing, so that would seem the most sensible thing to do. It is very unlikely HMRC will do anything if this is your first offence. You've not exceeded the overall subscription limit, just subscribed to an invalid combination of ISAs.

fidaa

masonic said:

It seems from my reading that the only way to resolve this without penalty is to do nothing, so that would seem the most sensible thing to do. It is very unlikely HMRC will do anything if this is your first offence. You've not exceeded the overall subscription limit, just subscribed to an invalid combination of ISAs.

What would HMRC do? Tax me?

masonic

fidaa said:

masonic said:

It seems from my reading that the only way to resolve this without penalty is to do nothing, so that would seem the most sensible thing to do. It is very unlikely HMRC will do anything if this is your first offence. You've not exceeded the overall subscription limit, just subscribed to an invalid combination of ISAs.

What would HMRC do? Tax me?

For a first offence against a particular National Insurance Number, they'd typically write to you and tell you not to do it again. Repeat offenders may have the invalid subscriptions removed and any interest generated from those savings treated as taxable for the period they were in the ISA.

isasmurf

There is scope within the regulations to 'repair' invalid subscriptions where there is an invalid combination of ISAs but total subscriptions across all ISAs are within the annual allowance. 'Repair' means the invalid subscriptions would be treated as not being in the ISA up to the date of repair and the interest accrued from them subject to tax, but will be allowed to continue in the ISA and enjoy the tax exempt status from the date of repair.

Whatever HMRC choose to do won't be until several months after the end of the tax year. 

fidaa

isasmurf said:

There is scope within the regulations to 'repair' invalid subscriptions where there is an invalid combination of ISAs but total subscriptions across all ISAs are within the annual allowance. 'Repair' means the invalid subscriptions would be treated as not being in the ISA up to the date of repair and the interest accrued from them subject to tax, but will be allowed to continue in the ISA and enjoy the tax exempt status from the date of repair.

Whatever HMRC choose to do won't be until several months after the end of the tax year. 

The interest is being lost on the other account as I moving it out so I am assuming no repair is needed?

masonic

fidaa said:

isasmurf said:

There is scope within the regulations to 'repair' invalid subscriptions where there is an invalid combination of ISAs but total subscriptions across all ISAs are within the annual allowance. 'Repair' means the invalid subscriptions would be treated as not being in the ISA up to the date of repair and the interest accrued from them subject to tax, but will be allowed to continue in the ISA and enjoy the tax exempt status from the date of repair.

Whatever HMRC choose to do won't be until several months after the end of the tax year. 

The interest is being lost on the other account as I moving it out so I am assuming no repair is needed?

The interest wouldn't be lost. If you moved it, you would be charged a penalty equivalent to X days interest. It does not change the amount of interest you will have earned.