Help!! HMRC randomly dipped in and took 1/4 of my wages

eskbanker

gravel_2 said:

brutal_deluxe said:

Yes there was no way of transferring between ISAs. The amounts were large but only in my current account for a few minutes? Will they understand this?

There  typically is a way to transfer between ISAs. You tell the new provider to do the transfer and they deal directly with the old provider.

By the rules, if you have withdrawn, let's say, £130k from one ISA into a current account then £130k was removed from the tax wrapper. Assuming you had your annual ISA allowance intact when you then put the £130k into a new ISA then HMRC will have you overpaying £110k into ISAs and it's the interest on that which they can tax.

But if treating it as new money, no ISA provider will accept a deposit of more than £20K.  The point stands though, that interest earned on an invalid ISA subscription is likely to be treated as taxable....

OP - have you checked your three ISA providers recently, to see if any of them have adjusted the types or names or your accounts?

gravel_2

Yes I did think of that after posting. No provider should have allowed such a large deposit. Unless it was several deposits to different providers.

brutal_deluxe

Thanks for the explanations guys, so sorry for the vague info. This is kind of making sense, I should have gathered all the facts before posting. Basically I only opened one new ISA back in March 2024 (ZOPA) which was maxed at 20k. The other money immediately went back into my existing ISA (but a new account) when I realised my daft mistake. So I guess i couldn't have exceeded my ISA allowance anyway? 

I'm just trying to figure out why HMRC are suddenly taking money off me. I don't want it to have anything to do with my stupid move of needlessly moving large amounts to and from my current account in those few minutes back in March. Hope that makes sense!

Your comments have been really useful btw

brutal_deluxe

One other question. In any case, would the amount that HMRC have taken off me this month, be THIS month only? It's about 600 quid. Next month I should return back to my usual tax code? 

masonic

I've never heard of HMRC taking this sort of action for a breach of the ISA rules, or any action without warning. Given that it is only an assumption that the tax code change is related to this, there is no way of saying what will happen next. But if they were looking to collect a certain amount of money via your tax code, it is most likely that they'd change the code once and allow the money to be collected over the remainder of the tax year. I would be surprised if it was changed again. If it returned "back to your usual tax code", then that would result in you getting the money back.

Dazed_and_C0nfused

brutal_deluxe said:

One other question. In any case, would the amount that HMRC have taken off me this month, be THIS month only? It's about 600 quid. Next month I should return back to my usual tax code? 

No.  That new tax code will usually be in place for the rest of this tax year.

You will almost certainly get a new tax code to be used from 6 April 2025.

I think you might find it useful to take a step back, get the relevant facts together and start again.

As far as your income tax affairs are concerned HMRC are only interested in your taxable income.  Interest from cash ISA's, where you have stuck to the ISA rules, isn't relevant.

Your new tax code (for this tax year, 2024-25) will almost certainly have taken into account an estimate of untaxed interest.  This is usually based on the actual figures reported to HMRC for 2023-24.

It is highly unlikely your new tax code is doing anything other than trying to collect extra tax towards the current tax year liability, it is highly unlikely that your new tax code (for 2024-25) is trying to collect any tax owed for 2023-24.

brutal_deluxe

But that would mean Jan/Feb/Mar would total approx 1800 tax before April when I go back to my original tax code? Even the total earned interest isn't anywhere near that!

Dazed_and_C0nfused

brutal_deluxe said:

But that would mean Jan/Feb/Mar would total approx 1800 tax before April when I go back to my original tax code? Even the total earned interest isn't anywhere near that!

Like I said, take a step back and maybe start by looking at the breakdown of the new tax code.

You can see that in your Personal Tax Account.

Why not post the breakdown and people will help you understand what it means.

brutal_deluxe

Ok so I've done a bit of digging as to what happened when I withdrew to my current account in March 2024..  (sorry about this)

Forget RCI Bank, that was untouched.

So I had 50k in an Atom account. It matured, so in my ignorance I withdrew it to my current account.

I opened a new ISA with ZOPA and put 20k of it in there, maxing my allowance.
I also opened a new ISA with Atom and put 30k (+an extra 5k) of it in there

So if anything, I've 35k of which the interest is taxable? If that's correct, how could it amount to 600 quid, or even potentially 1800??!

Dazed_and_C0nfused

brutal_deluxe said:

Ok so I've done a bit of digging as to what happened when I withdrew to my current account in March 2024..  (sorry about this)

Forget RCI Bank, that was untouched.

So I had 50k in an Atom account. It matured, so in my ignorance I withdrew it to my current account.

I opened a new ISA with ZOPA and put 20k of it in there, maxing my allowance.
I also opened a new ISA with Atom and put 30k (+an extra 5k) of it in there

So if anything, I've 35k of which the interest is taxable? If that's correct, how could it amount to 600 quid, or even potentially 1800??!

With all due respect you aren't making much sense at the moment.

To start with how could you open an ISA and put £30k in it 🤔

What matters is the interest, not the capital.  And interest from an ISA is exempt from tax.  Providing you didn't break the ISA rules.

And as far as the tax code is concerned you would be better off actually understanding the details of the code itself rather than trying to think what you might have done and how that could or couldn't impact things.

The code is a fact, why not look at those facts and then try and understand what you can do about them if HMRC have made some incorrect assumptions?