Overpayment into Cash ISA

skray

Hi

I have received a small amount £56 as Goodwill Gesture from a bank as I was unhappy with the time it took to complete an ISA transfer.

However this money was paid into my Cash ISA account and not into my current account held with the bank.

I have already subscribed the maximum £20K into a Cash ISA with a different bank. This means my total ISA investment for the current year exceeds £20K.

What are the options - should I simply ask the bank to transfer the goodwill amount along with any accrued interest to my current account and include the interest in my SA return, or contact HMRC.

https://community.hmrc.gov.uk/customerforums/pt/b3aa39ea-1161-ee11-a81c-0022480003c7#:~:text=In situations where you have,Thank you.

Thanks in advance

Regards

eskbanker

As it's not money you've paid in as such, then it might not fall foul of HMRC compliance checks, so maybe worth asking the bank to clarify how it would be reported to HMRC and for them to rectify the issue if it was to be treated as a current year contribution rather than the equivalent of extra interest.

masonic

Does your provider show how much of your allowance you have used for 2024/25? Does it show something other than £20,000?

skray

masonic said:

Does your provider show how much of your allowance you have used for 2024/25? Does it show something other than £20,000?

The provider does not show anything as such - these were ISA Transfers from past years the 20K limit does not apply. I have already invested 20K with a different bank. As far as I remember when I applied for ISA Transfer I only had to declare the funds do not belong to current year allowance.
The ISA Transfer originally arrived into variable Cash ISA account then moved to Fixed Deposit ISA - that is the balance in variable Cash ISA dropped to zero again. Now the goodwill gesture has been paid into this variable Cash ISA account now showing a balance of £56.

pochisoldi

skray said:

Hi

I have received a small amount £56 as Goodwill Gesture from a bank as I was unhappy with the time it took to complete an ISA transfer.

However this money was paid into my Cash ISA account and not into my current account held with the bank.

I have already subscribed the maximum £20K into a Cash ISA with a different bank. This means my total ISA investment for the current year exceeds £20K.

What are the options - should I simply ask the bank to transfer the goodwill amount along with any accrued interest to my current account and include the interest in my SA return, or contact HMRC.

https://community.hmrc.gov.uk/customerforums/pt/b3aa39ea-1161-ee11-a81c-0022480003c7#:~:text=In situations where you have,Thank you.

Thanks in advance

Regards

Have a look at How to manage ISA subscriptions - GOV.UK

Some selective from that source...

"Investors can subscribe cash to each type of ISA. They must subscribe with their own cash"
The £56 wasn't your cash, it was compensation paid by the bank.

"If the payment instruction has been received and accepted by the manager but due to manager error there’s a delay before the sum is applied to the ISA, any compensation paid to cover lost growth and income, can be added to the ISA without counting as a fresh subscription."

As regards to what to do, I would simply leave it as is (unless you have a better use for £56+interest outside the ISA)

The bank is unlikely to report the £56 as a subscription and HMRC will probably be none the wiser.

If HMRC send you a love letter alleging a £56 oversubscription, then write back saying that the money was compensation paid by the bank, and paid by them, and you had no choice or option to determine where the money went and hence cannot amount to a subscription. (see my first quote).

If it all goes to pot, you simply register a complaint with the bank, and get them to put you back in the position you should have been in had they not broken things.