ISA cash allowance question

d712

I paid £1000 into an ISA on 6th April and have since opened another one with the same bank/building society with a balance of £1 for now.

So altogether I have deposited £1001. The guy I spoke to in the branch said I can deposit a further £2599 into the ISA to bring the total up to £3600.

However on my online banking it stated that I can deposit a further £3599...

If I did this I would exceed the limit. What would then happen?

Aegis

d712 wrote: »

I paid £1000 into an ISA on 6th April and have since opened another one with the same bank/building society with a balance of £1 for now.

So altogether I have deposited £1001. The guy I spoke to in the branch said I can deposit a further £2599 into the ISA to bring the total up to £3600.

However on my online banking it stated that I can deposit a further £3599...

If I did this I would exceed the limit. What would then happen?

If you paid in to your ISA on the 6th of April, I think you were technically in the new tax year, so your allowance should already be down to £2599 and you should only be contributing to one of the accounts, not both.

Ian_W

I paid £1000 into an ISA on 6th April and have since opened another one with the same bank/building society with a balance of £1 for now.

You shouldn't have done that as you can only have one "active" ISA that you contribute to each tax year, you can transfer accounts and make further contributions but that doesn't seem relevant to your post. Contact the bank/BS and explain your error, as you haven't exceeded the limit they should be able to "repair" the situation with too much drama.

So altogether I have deposited £1001. The guy I spoke to in the branch said I can deposit a further £2599 into the ISA to bring the total up to £3600.

He's right but should have spotted you've got two active ones with the same institution.

However on my online banking it stated that I can deposit a further £3599...

On the £1 one you could - if you hadn't opened an earlier one in the same tax year and that info probably only refers to that £1 balance account.

If I did this I would exceed the limit. What would then happen?

Depends. If it was an error/genuine mistake - interest on the money above the allowance would be taxed. If it was clearly a fraud, eg multiple applications, then you could be prosecuted worst case or HMRC could charge you a civil penalty of up to 100% of the tax owed, plus you'd have to pay the tax.
You have to give your NI number for each application so not hard for HMRC to catch you - though it would probably be after the end of the tax year when ISA managers make returns to the taxman.

if you paid in to your ISA on the 6th of April, I think you were technically in the new tax year,

Not "technically" but actually as the old year ends 5/4 and the new one begins the next day! I do however wonder how the OP opened the ISA on 6th as it was a Sunday, I made an online instant transfer into mine that day but it shows as credited on the 7th - drat a days lost tax free interest!

d712

On the 6th April I paid £1000 into my variable rate ISA using an immediate transfer online from a savings account with the same bank/building society.

The following weekend I went to a branch and switched the variable rate ISA to a fixed rate ISA where you can not make any additional deposits or withdrawals for the entire term.

The guy I spoke to said that I could open a new variable rate ISA with £1 and the £2599 of my allowance that had not yet been used can be deposited into this new variable rate ISA over the remainder of the tax year.

However when I looked at my accounts online, it stated that I could deposit a further £3599 into it.

Sorry if I didn’t make it clear first time!

Baldur

d712 wrote: »

On the 6th April I paid £1000 into my variable rate ISA using an immediate transfer online from a savings account with the same bank/building society.

The following weekend I went to a branch and switched the variable rate ISA to a fixed rate ISA where you can not make any additional deposits or withdrawals for the entire term.

The guy I spoke to said that I could open a new variable rate ISA with £1 and the £2599 of my allowance that had not yet been used can be deposited into this new variable rate ISA over the remainder of the tax year.

However when I looked at my accounts online, it stated that I could deposit a further £3599 into it.

Sorry if I didn’t make it clear first time!

You can only open & pay new money into ONE Cash ISA per tax year, whether you pay the full £3,600 into it or only £1 - you were advised incorrectly.

Expect some correspondence from the taxman.... unless you have the date on which you opened the first ISA wrong & it fell into last tax year's allowance (6th was a Sunday).

dunstonh

HMRC allow 1 error providing you dont exceed the overall contribution limit.

It is worth nothing that a lot of ISA providers dated the 07/08 transactions on 6th April due to the 5th falling on a weekend. A late Friday or Saturday contribution would show 6th April but would apply to last tax year. If you actually made the payment on the 6th then it applies to this tax year.

Baldur

dunstonh wrote: »

HMRC allow 1 error providing you dont exceed the overall contribution limit.

It is worth nothing that a lot of ISA providers dated the 07/08 transactions on 6th April due to the 5th falling on a weekend. A late Friday or Saturday contribution would show 6th April but would apply to last tax year. If you actually made the payment on the 6th then it applies to this tax year.

The repair of the invalid subscriptions is, as you say, possible but the branch employee, who allowed, nay advised the breach should be beaten severely with a copy of HMRC's Notes of Guidance.....;)

d712

I have only opened one cash ISA this year.

The fixed rate ISA used to be the variable rate ISA that I have had for several years. The entire balance was transferred on 12th April, the roll number of the account remains the same. I then opened a variable rate ISA with an initial deposit of £1.

Does this make things clearer? I've asked different people about this and got conflicting answers. Where can I go to to get this clarified?

The hmrc.gov.uk site states that for 'cash ISAs, an individual can invest up to £3,600 a year, and can only invest with one provider in any one tax year.'

The two ISAs are with the same bank/building society. Doesn't that count as one provider?

dunstonh

It helps to be clear when discussing something otherwise you will get conflicting information.

You appear now to be saying that you have only contributed to one ISA in this tax year and the other was a transfer. Is that correct?

d712

I'm only really repeating what I've said before.

On the 6th April I deposited money into my cash ISA that I have with Halifax. This was a variable rate ISA. On the 12th this variable rate ISA was switched to the fixed rate ISA, the roll number for this is unchanged. I then opened a variable rate ISA with Halifax and deposited £1 into it.

As it is the same building society, doesn't this count as one provider?

Baldur

d712 wrote: »

As it is the same building society, doesn't this count as one provider?

The rules say nothing about 'one provider', you are only permitted to open and pay new money (your £3,600 allowance for that tax year) into one Cash ISA in each tax year.