Exceeding your ISA allowance.

Chjaka

I was just reading this article regarding loopholes in ISA regulations and came across the following statement;

"...HMRC collects comprehensive annual information from ISA providers, which enables us to identify all individuals who breach the ISA rules. If savers deposit or invest more than their individual limit ... then HMRC will write a 'notice of discovery' to their Isa provider, pull the extra funds out of their Isa, tax them and claw back any unwarranted interest."

I was curious to see whether HMRC are as meticulous as they claim to be in identifying "all individuals" who oversubscribe to ISA's. Have you ever accidentally, or purposefully, oversubscribed to an ISA and did HMRC "claw back" the unwarranted interest or did it just go unnoticed?

(Proviso: This question is asked purely out of curiosity, it infers absolutely no intention to purposefully exceed any ISA allowances or to provide any encouragement for others to do so).

Stuey1980

I went slightly over the limit once as keeping track of what has gone in can be tricky if you have taken some out here and there. The ISA provider simply returned the excess to the account where the cash came from almost immediately. No interest was earned on it.

innovate

Chjaka wrote: »

I was curious to see whether HMRC are as meticulous as they claim to be in identifying "all individuals" who oversubscribe

Yep, dead easy for the HMRC to do since they get a report from each ISA provider for each NI number. Not hard to fish out the oversubscribers, that's why they catch up with all of the ones that haven't yet been dealt with by an ISA provider. Individual ISA providers wouldn't normally know if you subscribed with another provider, thus the HMRC will control the subscriptions overall.

helptoyou

An article from 2009 ?? Maybe you should read current instructions !!!

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

jimjames

As you can invest up to £11520 in a S&S ISA and the balance in a cash ISA it is impossible for the providers to know your available allowance during the year. In theory you could open a S&S ISA with the full amount and also a cash ISA to the full limit putting you 50% over your allowance.

HMRC will check the return at the end of the year and cancel one or both of them so is it worth the risk.

westy22

I inadvertently went over my ISA allowance a couple of years ago - HMRC did spot it and wrote to me the following year but only with a 'don't do it again' letter and no reduction to the sums invested. I think I was about £250 over the limit.

I've been extra careful since then!