What if I exceed the tax free limit?

n65uk

If I exceed the tax free limit on the ISA what do I get taxed for after that?

Does any one have any advice on how best to keep savings after I've hit that limit (£5700)?

innovate

The allowance for cash ISAs in the current tax year is £5,760. Your total ISA allowance is £11,520. You can put your entire allowance into an S&S ISA, or put up to £5,760 into a cash ISA.

If you get found to have exceeded it, the HMRC will send you a snot letter, the extra payment will be removed from your ISA, and you won't get any interest on it. The likelihood that any overpayments will be detected is 100% since it's dead simple to detect, based on the statutory reports all ISA providers have to submit to the HMRC each year.

There are plenty of other places, some of them paying better interest than the best cash ISAs. Such as some current accounts or Regular Savers. There's a huge amount of information on the forum on this, just have a little browse and you'll soon find some interesting stuff.

patientperson

HMRC made a mistake with my Isa contributions a number of years ago. I transferred my new Isa to another provider in the same tax year. HMRC wrote to me about my 2 Isas in the same tax year. The onus to prove them wrong was on myself which I did.

badger09

patientperson wrote: »

HMRC made a mistake with my Isa contributions a number of years ago. I transferred my new Isa to another provider in the same tax year. HMRC wrote to me about my 2 Isas in the same tax year. The onus to prove them wrong was on myself which I did.

If I were a betting badger, which I'm not as I have other vices
I would place a substantial bet on the mistake not having been made by HMRC, but by either your 'old' or your 'new' ISA provider misreporting the transfer.

grey_gym_sock

badger09 wrote: »

betting badger

now there's a good name for a bookmaker ... (we all know what alliteration did for paddy power)

lisyloo

If I exceed the tax free limit on the ISA what do I get taxed for after that?

You may get a slap on the wrist from HMRC.
This isn't a big deal the first time, but could have them looking into your affairs if you did it repeatedly so best avoided.
Shouldn't be that hard to check your transactions and do addition or keep a running total.

Does any one have any advice on how best to keep savings after I've hit that limit (£5700)?

If it's definitely savings then it's simply a case of finding the best rate you can.
It may (or may not) be appropriate to consider pensions or investments.

dunstonh

Does any one have any advice on how best to keep savings after I've hit that limit (£5700)?

Wait until next tax year to add to it or look at stocks & shares ISAs.

antonic

n65uk wrote: »

If I exceed the tax free limit on the ISA what do I get taxed for after that?

Does any one have any advice on how best to keep savings after I've hit that limit (£5700)?

In the past (ie when I worked on the Investor Compliance Unit for HMRC), if you made exceeded your ISA allowance OR had invested in an invalid ISA combination, then the invalid ISA was voided in full.

Inland Revenue (as it was then !) changed tack and then decided to go down the route of issuing warnings etc.

antonic

patientperson wrote: »

HMRC made a mistake with my Isa contributions a number of years ago. I transferred my new Isa to another provider in the same tax year. HMRC wrote to me about my 2 Isas in the same tax year. The onus to prove them wrong was on myself which I did.

HMRC get the information from the ISA managers directly.

innovate

Chapter 14 of the Guide to ISA Managers gives you all the gory detail of what has to be reported by the ISA provider how and when.