The Lemon Fool

Hi
Earlier in the financial year I opened a Cash ISA with £5.00 intending to transfer in an existing Cash ISA. This didn't happen and completely forgot about it. Later I opened an Cash ISA with another provider and put £3000 cash into this new ISA. I came across the original whilst checking some other finance and realised that I now opened 2 in the same year. I would really like to keep the second ISA as it is paying a better rate and I thing I incur a small penalty if I close it. I don't mind closing the first one. Should I inform HMRC or wait until they get in touch with me at the tax year end? Would I lose all the interest accrued or would it just be added to my taxable allowances?

Thanks for any help
Mike

I've never done it myself, but I think I remember reading that for a "first offence" the most that is likely to happen is that you'll get a letter saying "don't do it again".

Scott.

Invalid combination of ISAs can be ‘repaired’ - some guidance here -

http://www.gov.uk/guidance/close-void-o ... or-repairs

Two choices, either phone the HMRC ISA helpline or wait until the end of the tax year and see what happens. Apocryphally (as already mentioned) if you wait then HMRC are likely to just send you a letter telling you not to do it again, but obviously your risk if you do that.

I made a similar error with shares ISA. I contacted the tax max and offered to correct my error, by removing the wronged payment. I was told not to correct it and wait until the end of the tax year and they would contact me if required.

I didn't hear back but I made sure the total amount of funds committed to both brokers remained within the ISA limits.

I'm not sure why you can only use one provider per tax year, probably a control feature or to make it easier for the tax man.

Would they have known if I hadn't fessed up? Still it was err indoors account actually but I would have visited her in prison.

It's only a fiver
I wouldn't worry too much

pje16 wrote:It's only a fiver
I wouldn't worry too much

Unless HMRC decides to nullify the second ISA, the £3000 one.

artengill wrote:Hi
Earlier in the financial year I opened a Cash ISA with £5.00 intending to transfer in an existing Cash ISA. This didn't happen and completely forgot about it. Later I opened an Cash ISA with another provider and put £3000 cash into this new ISA. I came across the original whilst checking some other finance and realised that I now opened 2 in the same year. I would really like to keep the second ISA as it is paying a better rate and I thing I incur a small penalty if I close it. I don't mind closing the first one. Should I inform HMRC or wait until they get in touch with me at the tax year end? Would I lose all the interest accrued or would it just be added to my taxable allowances?

Thanks for any help
Mike

Just quietly close the first one, preferably before the end of the FY it was opened in, and then forget about it. No need to inform HMRC of anything.
HTH
Maylix

Maylix wrote:

artengill wrote:Earlier in the financial year I opened a Cash ISA with £5.00 intending to transfer in an existing Cash ISA. This didn't happen and completely forgot about it. Later I opened an Cash ISA with another provider and put £3000 cash into this new ISA. I came across the original whilst checking some other finance and realised that I now opened 2 in the same year. I would really like to keep the second ISA as it is paying a better rate and I thing I incur a small penalty if I close it. I don't mind closing the first one. Should I inform HMRC or wait until they get in touch with me at the tax year end? Would I lose all the interest accrued or would it just be added to my taxable allowances?

Just quietly close the first one, preferably before the end of the FY it was opened in, and then forget about it. No need to inform HMRC of anything.

They'll already know about it.

(But as has been said, there will likely be no serious repercussions.)

Scott.

The linked HMRC page, as I understand it, says that if you open two cash ISAs in one year, the second one is void/invalid and is not repairable.

My advice, assuming the first ISA is not worth bothering with is to either:
Close both ISAs and open a new (third) ISA.
Close ISA 2 and transfer ISA 1 to a new (third) ISA and once transferred top it up. (Probably not worth the effort)

Any interest paid on the second ISA will be taxable (may be covered by savings allowance).
The third ISA should be capable of holding £20k of new subscriptions less any non-transferred contributions to the first ISA and any stocks and shares ISA.
The third ISA will definitely be able to receive £20k less anything paid into any ISA.

Pochisoldi