What happens if you put too much in?

Forum_User_2

I have some ISAs, and one of them it allows immediate transfer in. It doesn't really have a limit or probably knowledge of what you put in the others. So what happens if I go over the limit by an mistake?

DavidHayton

Don't worry if you are transfering money from one ISA to another. You can transfer as much as you like.

The annual limit applies only to new money that you are putting into your ISA.

David

pinkdalek

If you were to over subscribe in a tax year to your ISA then your bank would refund the extra back to an existing account you may have with them eg current account or they would send you a cheque.

If you accidentally funded 2 ISAs in the same year with different providers then you would receive notification from the Inland Revenue advising you that you need to cancel the most recent ISA subscription. Unless you were taking the "mickey" with your ISA allowance eg opening several in the same year at various banks then you would not receive any further punishment from the inland revenue. They have been known to ban people from opening ISAs if they have been found to be abusing the system.

Forum_User_2

As I said I have some ISAs, each bank wouldn't know what you've put in the others ones so they wouldn't be able to stop you. So you could by accident accidentally put too much in them in total! This is what I want to avoid! Would the inland revenue get angry about it? Would you get tax?

AirlieBird

You can only put money in one ISA each tax year. If you transfer the ISA that contains this years subscriptions then the amount you have put in to the ISA this year is reported to the new ISA manager. The ISA manager holding your ISA with current year subscriptions is responsible for ensuring that they do not accept more then the current year limit. You are responsible for ensuring that you only subscribe to one ISA and stay within the annual limit.

All ISAs are reported to HMRC at the end of the tax year. HMRC then run a series of checks to find people that have not played by the rules. HMRC have a number of options open to them to what action they could take. For example, they may choose to invalidate the subscriptions that are over the limit or they may choose to give you a warning.

Forum_User_2

AirlieBird wrote: »

You can only put money in one ISA each tax year

No, this isn't true. You have the total limit of 5100, but that can be spread over more than one.

Ilya_Ilyich

You can only fund one new cash ISA per tax year to the tune of at most £5,100 (for the current tax year).

You can transfer existing ISAs from previous tax years into new ISAs without counting towards the 1/year limit and without counting towards the £5,100 limit.

As pinkdalek said, if you exceed the contribution or account limit for a year the Inland Revenue will inform the ISA manager who will refund your overcontribution/cancel the subscription, unless you've made a habit of doing this in which case you may receive punitive treatment.

blueberrypie

Forum_User wrote: »

No, this isn't true. You have the total limit of 5100, but that can be spread over more than one.

No, it can't. All of your cash ISA contributions for the current tax year must be with one provider.

The exception is if you transfer the current year's contributions from one provider to another - you could then top up the funds to the limit of £5100. But what you say about spreading it over more than one cash ISA provider is completely wrong.

If you were to fund more than one cash ISA during a tax year, only the first one would be valid. The Inland Revenue would find out about this when the ISA providers report to them at the end of the tax year.

AirlieBird

Forum_User wrote: »

No, this isn't true. You have the total limit of 5100, but that can be spread over more than one.

http://www.hmrc.gov.uk/isa/faqs.htm#8

dunstonh

Forum_User wrote: »

No, this isn't true. You have the total limit of 5100, but that can be spread over more than one.

It is one provider per person per tax year for contributions for each element (cash & Stocks and shares)

As I said I have some ISAs, each bank wouldn't know what you've put in the others ones so they wouldn't be able to stop you. So you could by accident accidentally put too much in them in total! This is what I want to avoid! Would the inland revenue get angry about it? Would you get tax?

It is logged under your NI number and when the systems are checked by computer after the tax year ends then HMRC can take action. Minor breaches are often dealt with by a "get out of jail free card" being used up as they allow one minor error per NI number. Suspected fraud or larger errors can either be dealt with by voiding the second and subsequent ISAs and potentially fining you.

Forum_User_2

Well, I've got plenty of ISAs. And none of the providers asked for NI numbers.

Santander didn't even ask for proof of address!