ISA allowance in the year Junior ISA converts to Adult ISA

eskbanker

Perhaps worth noting that the definitive source, i.e. the legislation, clearly defines that the £20K annual contribution limit is specifically for contributions to non-Junior ISAs:

The overall subscription limit for any qualifying individual for any year (that is the aggregate of the qualifying individual’s subscriptions to all accounts that are not junior ISA accounts in that year) is £20,000.

https://www.legislation.gov.uk/uksi/1998/1870/regulation/4ZA

incus432

I suspect either the IFA either didnt tell the ISA helpline this related to 20-21 and not now, or he spoke to someone who wasn;t sufficently au fait with the rules and changes (it's happened to me before)

I dont normally have an IFA - this is a sort of overhang of some annuity advice for which I paid him an ex gratia amount.

jaybeetoo

Get rid of your IFA. In the tax year my son’s turned 18 I contributed to their Junior ISA and their ISA to the full amount. Martin Lewis covered this a few years ago.

Kim_13

https://forums.moneysavingexpert.com/discussion/comment/81857299#Comment_81857299

Agree. This is a fairly basic question and nobody getting paid the sums that an IFA is should be getting it wrong (though I’m sure there some in HMRC who would and who might now, as a result of the letter sent on the back of the incorrect advice, chase son for an amount of tax.) If they are making this sort of mistake, what else might they be getting wrong? That he has continued to insist there was an oversubscription says a lot: IFA would prefer to convince a client to pursue an incorrect course of action rather than admit he made a mistake or even let it lie on the basis that it was years ago and that he wouldn’t be liable if anything did come from it.

There was actually a £2k undersubscription, as only £18k was paid into a permitted combination of Adult ISAs in the tax year he turned 18. If the government wanted to prevent a £29k allowance in the year someone turned 18, they could easily have said £20k less anything paid into a Junior ISA in that tax year, in the same way as we all know that it is not £20k + £4k LISA.

incus432

https://forums.moneysavingexpert.com/discussion/comment/81857301#Comment_81857301

"The Individual Savings Account Regulations 1998, Section 4ZA is up to date with all changes known to be in force on or before 27 January 2026"

Great spot . Looks 100% conclusive to me,.

PS The IFA has now said
"On a plain reading, that wording is conclusive: the £20,000 limit applies to adult ISAs only, and Junior ISA subscriptions are carved out and do not count towards that aggregate limit. On that basis, contributions made to a Junior ISA in the same tax year should not reduce the adult ISA allowance, regardless of the timing of conversion"

A big shift from his position yeaterday "I have rechecked the position carefully against HMRC ISA guidance. Unfortunately, the view that two separate allowances apply in the year a Junior ISA converts to an adult ISA is not supported by HMRC rules. This has also been verbally confirmed to me by HMRC’s ISA Helpline "