Overpaid ISA allowance

Mercenary Keyboard Warrior · 19 Apr 2011 at 22:00

I mistakenly paid 2k into my 2010 ISA instead of my savings accout, now I instantly took it back out, but in theory I have overpaid into cash ISAs by 2k in 2011/2012 tax year. My allowance was already used for my new Halifax ISA.

I sent a web note to Santander and said could they simply delete the transaction as it was immediately reversed, they said no.

So question is will the tax man find out. As it is I have actually requested a transfer from the Santander ISA to the halifax one.

Do the banks etc send details to HMRC on deposits into ISAs?

Quick google turned up speaking to HMRC if you make an error on paying into an ISA but I would prefer to avoid talking to them if poss.

Anyone done similar by any chance?

Vonhelmet · 20 Apr 2011 at 00:09

You can only have one ISA at a time, and they expire at the end of the tax year. Your 2010 ISA is no longer an ISA. It will have devolved into some bog standard savings account.

Edit: the above is wrong. Please ignore it!

Pudney · 20 Apr 2011 at 01:20

That's not quite right. You can only open one ISA a year but prior year's ISAs remain just that - an ISA with tax free income.

As for the issue the excess over the allowance is no longer tax free income. However as you've withdrawn it immediately you will have earnt no interest on it and therefore there is no potential tax liability.

It would still probably be best to disclose what happened. Better that than they find out somehow and decide to launch an enquiry on you!

Edit: Blimey, should really go to bed.

Energize · 20 Apr 2011 at 01:47

Lots of people do it, you won't get into trouble with hmrc for doing it once.

Danger Phoenix · 20 Apr 2011 at 06:02

vonhelmet said:
You can only have one ISA at a time, and they expire at the end of the tax year. Your 2010 ISA is no longer an ISA. It will have devolved into some bog standard savings account.

That is not true. An ISA will always stay an ISA and you can have however many you want. You can only just use one of them per tax year.

It should be alright because it is clear you have not gained anything from it (tax free interest etc.) but just to be on the safe side you should just give them a call and make a note of the persons name and department in case they do chase it up afterwards.

W00dy · 20 Apr 2011 at 06:09

Lots of people do it, you won't get into trouble with HMRC for doing it once

Correct. If you have over-subscribed to an ISA in any one tax year, they will simply instruct the product provider / bank to move the balance above the limit to another account.

jamief · 20 Apr 2011 at 07:06

vonhelmet said:
You can only have one ISA at a time, and they expire at the end of the tax year. Your 2010 ISA is no longer an ISA. It will have devolved into some bog standard savings account.

Wrong on both counts. You can have multiple ISAs and your previous ISAs remain tax free. You could in theory have one ISA with provider A, and one with provider B in the same tax year, and as long as your total subscriptions during the tax year were under the limit then you'd be okay.

In the case of the OP- don't worry about it!

edscdk · 20 Apr 2011 at 07:19

vonhelmet said:
You can only have one ISA at a time, and they expire at the end of the tax year. Your 2010 ISA is no longer an ISA. It will have devolved into some bog standard savings account.

Yer, I never realised that, I was getting an amazing 0.6% on several ISA's from previous years...

Vonhelmet · 20 Apr 2011 at 07:30

Whoops! Looks like I was wrong. To be honest I needed to find out how it worked anyway as I need to sort mine out, and being wrong in the Internet is great way to get told what's correct

Thanks all!

edscdk · 20 Apr 2011 at 07:35

vonhelmet said:
Whoops! Looks like I was wrong. To be honest I needed to find out how it worked anyway as I need to sort mine out, and being wrong in the Internet is great way to get told what's correct

Thanks all!

but they ^&*~ you on the interest I always assumed (stupid i know) that an isa would ahve a good interest rate however all mine dropped down to under 1 %....

maybe that was jsut barclays but I was shocked when I realised my isa's were getting 0.8% interest... (im sure some were lower as well)

Mercenary Keyboard Warrior · 20 Apr 2011 at 07:47

Thanks all, may ring HMRC.
Iguess they are told payments into cash ISAs and they simply tot them up on their system, hence you having to provide NI number when taking the ISA out.

Yes ISAs have a great headline rate for 1 year (typically) then drop to a pretty much default rate of bank base at the moment.

Im ****ed with Santander they changed the order of my accounts on screen and hence my error as my newest savings account was bottom of the list then boom suddenly they list my old ISA at the bottom.

Will update what they say after I have rung them, if I ring them lol

grumpysculler · 20 Apr 2011 at 09:39

There was an article about accidents like these on thisismoney recently.

http://www.thisismoney.co.uk/savings-and-banking/article.html?in_article_id=526015&in_page_id=7

Slightly different, but it seems that HMRC don't really care about odd mistakes (they will find out as they get notified of all ISA activity) and the worst you will probably get is a letter telling you not to do it again and paying any tax you avoided. You do fall into the "breach the £5,100 limit" but you did sort-of-fix it quickly.

Call HMRC - always better to tell them than wait until they come knocking!