Going over £3k... What happens?

Anwen_2

Sadly I'm not in any danger of this problem, this year, but out of curiosity: if someone has paid in a total of, say, £2700 over the year into their ISA, but has not bothered to total it all up, what would happen if they then tried to pay in £500? Would the payment be rejected in full, in part, or something else?

Debt_Free_Chick

If it's the same provider, it might get rejected. Otherwise, it would eventually be "found out". There's a danger that the whole £500 would count as "not an ISA" investment.

It can be a bit messy to sort out, so better to track what you deposit in each ISA e.g. using MS Money

Anwen_2

Cool. How would I do that in Money, is it fairly straightforward? I mean, I know I can track the balance, but is there a fairly simple way of working out the totals paid in?

blinko

this happend to me by accident, i was with one provider and i had some money in my ISA and about 6 months later i opended another ISA cash with £3000 after about 2 months i got my statement and i remembered about the the other ISA so far nothing has happend but i think the IR will probably be taking the interest awy from me or tax me

YorkshireBoy

Anwen wrote:

Cool. How would I do that in Money, is it fairly straightforward? I mean, I know I can track the balance, but is there a fairly simple way of working out the totals paid in?

You can run a report for transactions on the account. Just run it from 6th April 2004 to 5th April 2005 for example.

The bonus of using Money is if you've also made withdrawals in the current tax year (perhaps for last summer's holiday spending money) and forgotten them it will remind you on the report. This way you won't forget that although you're current balance shows £2,800 for example, you've actually put in £2950 over the year (and withdrawn £150), and so have room for only another £50 in the current tax year.

HTH
YB

isasmurf

Anwen wrote:

Sadly I'm not in any danger of this problem, this year, but out of curiosity: if someone has paid in a total of, say, £2700 over the year into their ISA, but has not bothered to total it all up, what would happen if they then tried to pay in £500? Would the payment be rejected in full, in part, or something else?

Your ISA provider should be responsible for making sure you don't invest over the limits.

However, if they don't, or you invest with two different providers then the Inland Revenue will find out and will make one of any number of options open to them depending on if you catch them on a good day.

All banks, building societies and anyone else that manages ISAs must provide details of all the ISAs they manage to the Inland Revenue after the end of the tax year. This includes, among other things, the type of ISA it is, how much was put into each of the different pots, and when it was opened and closed.

Using this data the Inland Revenue run a compliance program around winter time when they look for people breaking the rules. When they find these people they will either 'void' the invalid ISA, charge tax on the surplus amounts, or what they call 'repair' the ISA.

deemy2004

Anwen wrote:

Sadly I'm not in any danger of this problem, this year, but out of curiosity: if someone has paid in a total of, say, £2700 over the year into their ISA, but has not bothered to total it all up, what would happen if they then tried to pay in £500? Would the payment be rejected in full, in part, or something else?

if the credit goes through and is not caught by the bank then the whole ISA is void.

No longer an ISA..... read the T&C..

isasmurf

This is what the Inland Revenue's guidance notes say

Subscription limits breached
The manager can repair this breach by removing the excess subscription from the PEP or ISA. If the excess has been used to purchase investments then the manager can repair the breach by removing those investments from the PEP or ISA. We will seek a recovery from the date the subscription exceeded the limit to the date of the audit report.

leaphaze

Anwen wrote:

Sadly I'm not in any danger of this problem, this year, but out of curiosity: if someone has paid in a total of, say, £2700 over the year into their ISA, but has not bothered to total it all up, what would happen if they then tried to pay in £500? Would the payment be rejected in full, in part, or something else?

I did this a few years ago with a Smile cash ISA via a transfer from my NW a/c. They upped my ISA to the max and refunded the difference via the same route it arrived.

blinko

yes im praying that they dont pick up on my mistake, otherwise i will lose a large chunk of my ISA this year

dunstonh

blinko wrote:

yes im praying that they dont pick up on my mistake, otherwise i will lose a large chunk of my ISA this year

Usually takes 12-18 months for get your letter from the IR. A letter goes to the provider too.