Consequences of exceeding annual ISA limit?

hgt

Have you perhaps got a friend or family member who is not using their ISA allowance this year?

Whilst it's illegal to use someone else's ISA allowance, if it's someone you really trust - there is nothing to stop you giving them £15,000 (as a gift) and then they choose to invest that money into an ISA.

Obviously that could get very tricky and you'd have to make sure you could trust that person etc, but could be worth thinking about.

Just as a note... Investments into an ISA have to be from your own money, so it's against the rules for example if you were to pay money directly into an ISA which is not in your name. So if you were to use the option above, you'd have to 'gift' the money to your friend by transferring to their current account etc, then they would have to fund the ISA themself as it is now their money.

gizz_mo

jimjames wrote: »

If you accidentally put in £5000 to a cash ISA and £11000 into a s&s ISA then it's likely no action would be taken.

If you deliberately put £15000 into a cash ISA and then falsely open another cash ISA with £15000 declaring that you have not paid into another ISA this year and repeat in subsequent years then I think the outcome will be different.

If you're really determined to get better returns than cash savings then why not look into s&s ISAs? Unless you're buying a house or have need for cash short term then having so much cash probably isn't best option.

I do have an s&s ISA from multiple previous years where I always split my allowance between cash and shares. This year I put the entire 15k allowance into my 123 cash ISA. I do need to keep my savings in cash which can be accessed quickly because I am looking for a house but still not found one I like. I sold my previous house mortgage free, hence the large amount of cash. I already have my cash split across 4 different savings accounts to keep below the FSCS maximums.
Thanks for your help

bryanb

jimjames wrote: »

If you deliberately put £15000 into a cash ISA and then falsely open another cash ISA with £15000 declaring that you have not paid into another ISA this year and repeat in subsequent years then I think the outcome will be different.

Not in my case (although max was lower at the time)
I put the full allowance in 2 ISA in one year, no comeback other than my money returned minus tax.

jimjames

bryanb wrote: »

Not in my case (although max was lower at the time)
I put the full allowance in 2 ISA in one year, no comeback other than my money returned minus tax.

So the money is no longer in the ISA wrapper and was just sent back to you? Useful info for the OP if that's the case but not any real benefit in having the ISA either.

gizz_mo

jimjames wrote: »

So the money is no longer in the ISA wrapper and was just sent back to you? Useful info for the OP if that's the case but not any real benefit in having the ISA either.

Well there would be a benefit if the interest rate is higher than your average standard easy access account. The benefit being the higher interest rate.
But after reading all the replies on here its probably not worth the hassle and would also not be worth inviting closer scrutiny from HMRC over the subsequent years.
Thanks

bryanb

jimjames wrote: »

So the money is no longer in the ISA wrapper and was just sent back to you? Useful info for the OP if that's the case but not any real benefit in having the ISA either.

Yes, just sent back when HMRC got round to it. Interest paid to date they returned cash. Tax on interest deducted at 20%