HMRC has extended the deadline for Icesave savers who have not yet transferred their cash ISA.
Depositors' money was returned from the online UK subsidiary of failed Icelandic bank Landsbanki with a certificate enabling them to re-invest it without losing its tax-free status, according to the BBC.
Icesave collapsed on 7 October last year, with over 300,000 UK customers unable to access a total savings of £5bn. Much of this amount was in Icesave's Isa account which paid 6.1%.
The certificate was only valid until 5 April 2009 with some customers yet to receive it. Consequently, HMRC has increased the deadline by six months to 5 October 2009.
The change was announced in HMRC's ISA Bulletin which has been sent to providers.
It reads: "A small minority of ISA investors have not received their compensation and/or their Isa certificates. These investors… would therefore lose their Isa tax advantages. The time limit for reinvestment will be extended from 5 April 2009 to 5 October 2009."
However, the deadline applies to all savers, according to a spokesman.
After announcing no UK saver would lose any money in the bank's collapse, the government faced the difficulty of what to do with ISA money as usually if an ISA is cashed instead of transferred, it loses its tax-free status.
The money was refunded direct into a bank account by the Financial Services Compensation Scheme.
Customers were sent a Reinstatement Certificate allowing the money to be moved to another ISA by the deadline of 5 April, which has now been extended.
While the certificates will still have the old deadline printed on them, ISA providers should accept them until 5 October. However, HMRC will not write to investors informing them of the new deadline.IFAonline
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