Help! may have messed up my ISA allowance.

Carl2510

Hi,

I opened two ISA accounts in December 2023 one was for a 1 year term and the other 2 year term, stupid me thinking cause i've done one as 2 year thinking that won't affect the tax year, i did one for 17K and one for 20K i've already had the 17K one mature so i need to try sort this other one can anyone help with what i need to do. thanks.

masonic

There's not really anything you can do, nor should you. HMRC may be in touch at some stage to let you know you exceeded the annual allowance. If it is your first offence, it is likely they'll take no action.

Carl2510

masonic said:

There's not really anything you can do, nor should you. HMRC may be in touch at some stage to let you know you exceeded the annual allowance. If it is your first offence, it is likely they'll take no action.

Is it not better i report it before i get any sort of possible fine or penalty.

as the second ISA i opened for the 2 year fixed rate hasn't matured yet so maybe they can do something with that before it matures.

masonic

ISA providers report all of the subscriptions they have received annually to HMRC. They have a process of going through that information in their own time. There isn't a fine for breaching the ISA allowance. For repeat offenders the account will be voided and the interest will be taxed. It is better for you if the account is allowed to mature, since you won't have to pay an early withdrawal penalty.

Carl2510

I am wanting to open another ISA, but im now worried about this so not sure i want to open one before it's sorted.

masonic

Any ISA you open and fund in this tax year will not be affected by the invalid ISA from the previous tax year. I would suggest you keep that one separate from your other ISA funds for now.

wmb194

Carl2510 said:

masonic said:

There's not really anything you can do, nor should you. HMRC may be in touch at some stage to let you know you exceeded the annual allowance. If it is your first offence, it is likely they'll take no action.

Is it not better i report it before i get any sort of possible fine or penalty.

as the second ISA i opened for the 2 year fixed rate hasn't matured yet so maybe they can do something with that before it matures.

Don't worry, there aren't any fines. The penalty, if applied, is that one of them will be made taxable. IIRC, it would be the second one you opened.

https://www.gov.uk/guidance/close-void-or-repair-an-isa-if-youre-an-isa-manager

Carl2510

masonic said:

ISA providers report all of the subscriptions they have received annually to HMRC. They have a process of going through that information in their own time. There isn't a fine for breaching the ISA allowance. For repeat offenders the account will be voided and the interest will be taxed. It is better for you if the account is allowed to mature, since you won't have to pay an early withdrawal penalty.

So as i've already received the 17K back with the interest. Will they just make me pay more through my work PAYE or will i have to pay up the tax on what i've gone over which is 17K as i've still got the other 20K in an ISA account until December.

Carl2510

I did receive a letter from HMRC in regards to my tax code so maybe it's already been sorted i shall have to dig it out and see what it says, Would a letter in regards to this situation say what its for or would they just say you owe this now .

masonic

Was the £17k ISA the second one you funded?

HMRC may write to you to tell you you've breached the ISA allowance and not to do it again. Most likely no action will be taken if it is your first offence. If they do take action, it won't be without informing you about the breach.

Carl2510

masonic said:

Was the £17k ISA the second one you funded?

HMRC may write to you to tell you you've breached the ISA allowance and not to do it again. Most likely no action will be taken if it is your first offence. If they do take action, it won't be without informing you about the breach.

No the 17K was the first one. 

20K thats not matured yet is the second one.