A&L refusing to accept transfer of ISA, money stuck in limbo, what can I do?

philip_l_2

Hi

I'm utterly confused and now appear to have £20k sat in limbo.

I wanted to move my ISA from the Halifax (on terrible variable rate) to the Alliance and Leicester. I opened the A&L ISA and filled out the forms to transfer the whole amount to the A&L.

After almost 3 weeks I received confirmation from the Halifax my account is closed and the cheque has gone to A&L. Ten days later I have received a letter from A&L saying they are unable to accept the funds as the Halifax have indicated that the transfer of funds includes current tax years funds, which it does (£2500). They go on to say "On checking our records, you have also subscribed to an ISA with Alliance and Leicester ths tax year", well of course I have to move the funds to them! I opened the A&L account and paid in £1100 to bring me up to the maximum for the tax year (£2500 to the Halifax and £1100 to A&L).

I can only think I am confused by the terminology, and have taken the word 'subscribe' to mean open, whereas you 'subscribe' anytime you pay money in. The Halifax ISA was opened years ago, so I only opened one ISA this tax year and thought I was doing absolutely nothing wrong.

The letter carries on with "as you are in breach of regulations please telephone HM Revenue & Customs and provide the following details", well there are no following details!

What will my options be? I can't see what difference it makes if I paid into two different ISAs this tax year providing I don't go above the limit.

I'm guessing this could take months to sort out and I could loose the tax free status, and in the meantime who is earning interest on my money? Any advice greatly accepted.

Regards

Phil

redcar_2

So are you saying you had put £2500 into the halifax account and also put £1100 into the new A&L account whilst intending to supplement this with £20k transferred from Halifax?

If so then I think you would be treated as having subscribed to two ISAs in the same tax year.

I'm sure the tax people will be able to sort it out. You'll be stuck at the poor interest rate for a bit longer and probably lose out on the A&L contribution interest, but if A&L return your cheque to Halifax then I can't see how Halifax can not pay you the interest for the whole time on the 20k.

I would have thought the tax office will be helpful as you've not gone over the year limit but it might involve cancelling the A&L one, putting the funds to top up to £3.6k into Halifax first and then transfer out of Halifax.

dunstonh

A&L are correct in rejecting the transfer. You have dual subscribed for this tax year. What you should have done is waited for the transfer to complete and then pay the £1100 in.

See if you can get A&L to void the £1100 ISA due to dual subscription. HMRC wont care as they allow you one error and you havent gone over £3600. It will just be noted on your NI number that you have used your get out of jail free card.

philip_l_2

redcar wrote: »

So are you saying you had put £2500 into the halifax account and also put £1100 into the new A&L account whilst intending to supplement this with £20k transferred from Halifax?

Yes that is what I have done. Basically what I have learnt now is that when it asks if you have already subscribed to an ISA in the current tax year means paid into an ISA, whereas I was thinking it meant opened a new ISA account.

A&L are correct in rejecting the transfer. You have dual subscribed for this tax year. What you should have done is waited for the transfer to complete and then pay the £1100 in.

See if you can get A&L to void the £1100 ISA due to dual subscription. HMRC wont care as they allow you one error and you havent gone over £3600. It will just be noted on your NI number that you have used your get out of jail free card.

Thanks for that, I will see if A&L can void it. I'll call them on Monday, the office is closed now typically.

Regards

Phil