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Question of the week: Cash ISAs
Former_MSE_Penelope
Posts: 536 Forumite
Q. Is it illegal to put more than £3,600 into a cash ISA this year and can the government can check if I do? I'm 33 years old and am looking for an account with reasonable interest.
Malcolm, by email
A: ISAs are tax-free savings accounts, and operate under rules set by the government. One of these says you can only pay up to £3,600 into a new cash ISA in any tax year (£5,100 if you're over 50), and that's all that the banks will let you do. If you try and open a second cash ISA and pay more in, then it is invalid and you won't get the tax-free benefit.
Banks provide comprehensive information to HMRC every year, so they do find out if individuals have over subscribed. If that's the case, then it will decide what action to take on a case to case basis. Usually it'll just close the second ISA and adjust the interest earned, but it could penalise you too.
Once you’ve filled up your ISA allowance you can still bag a top rate – read the Top Savings guide for full details.
Click reply to discuss
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Malcolm, by email
A: ISAs are tax-free savings accounts, and operate under rules set by the government. One of these says you can only pay up to £3,600 into a new cash ISA in any tax year (£5,100 if you're over 50), and that's all that the banks will let you do. If you try and open a second cash ISA and pay more in, then it is invalid and you won't get the tax-free benefit.
Banks provide comprehensive information to HMRC every year, so they do find out if individuals have over subscribed. If that's the case, then it will decide what action to take on a case to case basis. Usually it'll just close the second ISA and adjust the interest earned, but it could penalise you too.
Once you’ve filled up your ISA allowance you can still bag a top rate – read the Top Savings guide for full details.
Click reply to discuss
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