ISA confusion

Corky99

Well I got totally confused, I knew you could save up to 20k per year and I knew you could have multiple ISA's so I recently added the max ammount to one cash ISA account pre April 5th, and then the same ammount again on April 6th, so far so good, but then I did the exact same process again with a second cash ISA account that I created Friday just gone, it was only last night that I realized that 20k was the total limit per year across all ISA accounts. So I withdrew all of the amount from the newly created ISA account and put it into a standard savings account. Then closed the new account down. Hopefully I've done the right thing, also I just read you can only open one ISA account per year, so I got that wrong as well. So within four days I have hopefully corrected things. Does this sound about right.

eskbanker

The rule about only paying into one ISA of each type per tax year was abolished a year ago, but you are still capped to a maximum of £20K of annual contributions across all ISAs in aggregate.

If you're saying that you paid £40K into two ISAs since Sunday then the best thing to have done would have been to cancel the second one within the initial cooling-off period (effectively voiding it as if it had never happened), rather than simply withdrawing and closing, but what's done is done.  Having emptied the second one, it's highly unlikely that HMRC would take any action, and even if they chose to, it would be late 2026 at the earliest, and there's nothing you could do about it, so best just forget it for now and move on....

twopenny

Here's the offical wording on it..........presume that's up to date

https://www.gov.uk/guidance/manage-isa-subscriptions-for-your-investors

It's a relatively easy read for a gov site and doing a search you are not the only one. What used to be straightforward when they started is now a test for mental agility.

Subscription limits

The overall ISA subscription limit is £20,000.

The investor can choose to split the overall ISA limit of £20,000 between their ISA accounts

If the over-subscription occurred in the current tax year, you can advise the investor that the excess and any related gains will be removed to correct the error. The investor should provide you with instructions on which subscriptions should be removed.

But you've already corrected I think. So you may get a letter sometime acknowledging this or not but you should be safe from the tax man because you were quick.

fuzzything

If it were me I’d contact the bank to ask if there’s any thing they can do to cancel the ISA Subscription even with the account being closed. I’d expect there to be a small amount of interest due on the account for the few days it was open and that might be something HMRC pick up and need sorting in future as per the extract in twopenny’s post.

masonic

twopenny said:

Here's the offical wording on it..........presume that's up to date

https://www.gov.uk/guidance/manage-isa-subscriptions-for-your-investors

It's a relatively easy read for a gov site and doing a search you are not the only one. What used to be straightforward when they started is now a test for mental agility.

Subscription limits

The overall ISA subscription limit is £20,000.

The investor can choose to split the overall ISA limit of £20,000 between their ISA accounts

If the over-subscription occurred in the current tax year, you can advise the investor that the excess and any related gains will be removed to correct the error. The investor should provide you with instructions on which subscriptions should be removed.

But you've already corrected I think. So you may get a letter sometime acknowledging this or not but you should be safe from the tax man because you were quick.

The text around the provider correcting the error relates to the situation where both ISAs are managed by the same provider (for scenarios where they are unable to automatically reject these payments).

OP, as @eskbanker suggests, you should contact the provider to ask them to cancel the ISA so that the subscriptions are treated as never having happened.

Corky99

OK thanks both for the quick reply, to be honest I did not know I could of cancelled the new one within a cooling off period, the first account I put 20 in a few weeks ago and then another 20 on Sunday, so that's staying as it is now until next April. For the second new account I put 20 in on Friday and 20 in on Sunday, then I had a panic attack last night I realizing what I'd done and quickly withdrew it all and it transfered back over this morning. I was so worried what I'd done I did not sleep well last night. As you say as I quickly corrected it hopefully should be OK. Thanks to both of you.

Corky99

OK I will try and contact them to cancel it, might be difficult now I closed it down, it was trading 212

Corky99

OK I have now emailed them and asked if it can be cancelled, no harm in trying.

 Thanks again and have a nice evening.

Corky99

Oh well that didn't work.

As you have initiated a deposit and withdrawn the interest received, you would have to reach out to the HMRC directly for further guidance.

I only withdrew the interest as that was only way to close the account down, it was only £17

Did try calling HMRC as well this morning but it's impossible to get through.

eskbanker

There won't be any point in discussing it with HMRC anyway, they'll just tell you to wait for their compliance reviews at the end of next year.

Corky99

OK so next year when they review it I will owe them £17?