'I paid into two cash Isas by mistake. What should I do?' (2024)

I had an existing cash Isa with Santander, and recently opened a new cash Isa with Nationwide.

I have put cash into both Isas this financial year, but haven't exceeded the limit. I've recently been told this isn't allowed under Isa rules

Is this correct, and if so what is my best course of action?

M. Lowe, email

In short, this is against the rules. You can only open and pay into one cash Isa and/or one stocks and shares Isa each financial year and the total sum cannot exceed the 2015/16 limit of £15,240.

When applying for an Isa, you should declare your existing subscription as providers will not have this information.

Nationwide provide the following declaration for online applications and ask customers to tick the box to agree:

^{Source: Nationwide}

If another account is mistakenly opened, the error will not be flagged up until the provider submits its annual subscriptions to HMRC.

Once the mistake has been identified, HMRC will contact you and advise which account needs to be closed. It is best to wait until HMRC contacts you as there is a risk that you may close the wrong account. A spokesman from HMRC said the message is “sit tight and expect contact”.

However, while savers can only open one new cash Isa each tax year, it is possible to switch to a different provider if you find a better rate. Check whether the Isa you want allows transfers and, if so, you can make the switch as long as you move all of the money out of the original Isa and close it.

While Isas remain a good option for savers, customers who have reached the annual limit may also want to consider other alternatives, especially considering the upcoming introduction of the new Personal Savings Allowance in April 2016.

Tom Adams, from SavingsChampion.co.uk says: "With the new allowance, you may be able to earn up to £1,000 in interest tax-free from a normal savings account, depending on your tax circ*mstances.