Paying into 2 Stocks & Shares ISA in same tax year (by Mistake)

Hi - I have just started my investment journey. As part of that, I started investing into Stocks & Shares ISA. However, what I didn't realise was that I am not allowed to invest in more than 1 account per ISA type in the same year and ended up investing into 2 accounts this year. After speaking to my ISA providers, I have been advised to sell all the shares and close 1 account. What I would also like to understand is how will my capital gains from the closed ISA account be treated. 2 questions regarding this: 1. Will the capital gains from the closed ISA account be taxed as a general investment or will this continue to be exempt from tax as a normal ISA investment by HMRC? 2. Based on question 1, how will this impact the £20k ISA investment allowance for the tax year - i.e., will the investment in the close ISA account be counted towards the £20k limit? Looking forward to the clarification.

Hi cm0805,
1. As it is a 2nd stocks and shares ISA, it loses the ISA exemption rules and will fall under normal taxation rules on income and capital gains tax.
2. If you have not met the 20k limit in the account that is kept open, you can still pay in up to the 20k maximum as the other account no longer qualifies under the ISA rules. any interest already received from the 2nd account also forms part of your personal savings allowance.
Thank you.

This is very helpful. Thank you so much @HMRC Admin 20. Regarding the 2nd stocks and shares ISA - is there any HMRC rule / direction to define which one is the 2nd ISA? Or, is it purely based on which I opened / invested in at a later date?

Hi,

You should check with the ISA providers. If the invalid account cannot be repaired, then the ISA must be closed.

Thank you.

Could you kindly elaborate what you mean by 'repaired'?

Hi cm0805,
Having it amended to show that no tax free interest is due.
You would need to determine yourself which account to close.
Thank you.