Confused regarding fixed rate ISAs

ClimbingSamurai

eskbanker said:

BoGoF said:

ClimbingSamurai said:

sparklymarkly said:

From the way you’ve described it, looks like you have subscribed to two different cash ISAs in the same tax year which is not allowed.
If you hadn’t withdrawn the HTB and just transferred it, you would have been alright but you have so it’s a new deposit.

I see , that’s unfortunate - it’s too late to reverse now, is it best to wait and see HMRCs response? Would worst case just be the account would be closed and I’d pay tax as if it was a standard savings account ? 

No, advise them now as I said earlier and they will tell you what you need to do.

There's no harm in asking but in all likelihood they won't actually tell you to do anything other than wait until they've received their submissions from the providers after the end of the tax year.

Anecdotally, they'll typically forgive a 'first offender' who's paid a total of less than £20K into two cash ISAs (maybe even three if anything was contributed to the HTB ISA in the same tax year), but worst case is to declare the second ISA to be invalid and to treat the interest income as taxable.

I agree, I think “advising them now” is going to be a waste of time , as it is its difficult to get through to a person and likely that person would just be an admin/case officer and may not even know themselves.

No interest has been paid yet anyway as they are fixed ISAs and I have no option to withdraw or close them anyway. I’ve been advised elsewhere to just wait it out for the time being, it’s only this week I’ve noticed that it may potentially be against ISA rules. 

Potentially if I’m able to prove that the funds came from a H2B ISA anyway then it may be fine, or alternatively if I do get charged tax on the interest then so be it, the rates I’ve got from these fixed accounts won’t be seen again most likely anyway. 

In the past it is quite a frustrating process regarding taxes/savings, often HMRC delay me receiving PAYE tax refunds because they are still awaiting the banks to tell them how much interest I’ve received. They may not be informed for up to 18 months after this tax year. 

eskbanker

ClimbingSamurai said:
they are fixed ISAs and I have no option to withdraw or close them anyway

Not strictly true - because they're ISAs they can be accessed at any time, even though there will presumably be a penalty for doing so, which in turn means that it's unlikely to be sensible to try to fix it yourself, even though it would be possible.

ClimbingSamurai

eskbanker said:

ClimbingSamurai said:
they are fixed ISAs and I have no option to withdraw or close them anyway

Not strictly true - because they're ISAs they can be accessed at any time, even though there will presumably be a penalty for doing so, which in turn means that it's unlikely to be sensible to try to fix it yourself, even though it would be possible.

Agreed, I believe it’s -90 days worth of interest 

d63

eskbanker said:

ClimbingSamurai said:
they are fixed ISAs and I have no option to withdraw or close them anyway

Not strictly true - because they're ISAs they can be accessed at any time, even though there will presumably be a penalty for doing so, which in turn means that it's unlikely to be sensible to try to fix it yourself, even though it would be possible.

if  hmrc did decide the new ISA were invalid, would the obligation then be upon the provider to close it down early and return the original investment plus any accrued interest to the investor without incurring any early closure penalty since it would not be the investor who was actually requesting the early closure?

ClimbingSamurai

As a bit of an update I still haven’t heard anything from HMRC regarding this & I note one of the original people who responded to this thread is now banned lol, figures by his abrupt response.

My tax for 23/24 still hasn’t been calculated either, is this normal? Anyone else in the same boat as me as to regards this, or my initial question?