I've paid into two cash ISAs within the same tax year. What should I do?

FREEISBETTER

I opened up a Mini Cash ISa with Barclays in March 2008 and paid in £100 lump sum. However I didn't realise that I had already paid £3000 inheritance in to another ISA in May 2007 - I thought I'd paid it in a lot earlier then that.

My questions is what are the penalties for having done this and what is the best thing to do now? I don't plan to pay any more in to the original ISa with the £3000 in it anyway.

Any help would be much appreciated. Thanks.

Hemel_2

You need to advise the bank - otherwise IR will be all over you...

It would also mean that the potencially the £100 will lose it's tax free status. I'd also consult the IR personally as banks are not tax experts (as its already a complex field!)

Baldur

Suggest that you ring the HMRC ISA helpline – 0845 604 1701 (08:30 to 17:00 Monday to Thursday - 08:30 to 16:.30 Friday) and explain the mistake.

Ian_W

HMRC Isa Helpsheet says:
Duplication
Remember you cannot invest in more than one cash ISA, or more than one stocks and shares ISA in the same tax year.
Mistakes do happen. If you do invest in more than one ISA of the same type in a tax year, the second ISA will not be tax-advantaged.
If this has happened call our ISA helpline. Have the details of your ISA accounts to hand when you call .

So provided you tell them there are no penalties for a genuine mistake, your £3K ISA will retain its tax free status and only the interest on your £100 will be taxed. Not too much to worry about I wouldn't have thought.