Accidental exceeded ISA limit

[Deleted User]

Hi All,

I have accidentally exceeded the ISA limit. I have invested £8000 in a cash ISA and £10,000 in an investment ISA this tax year. I called the bank to let them know and ask what to do and they said HMRC would tell them that I had exceeded the limit (I hoped I could just withdraw some money!). They told me to ring HMRC. I did this and HMRC said the bank would tell them that I had exceeded the limit, I don't know how the bank would know though as the ISAs are with different providers. Both parties seem to be relying on the other to tell them about the overpayment.

Has anyone got any advice or experience of what may happen next?

Ali

jimjames

Take the excess out of the cash ISA. In fact you'll be better off to take the whole amount out of the cash ISA and put it in a better paying current account

Krash420

I accidentally went beyond my limit today as well - or tried to in that I transferred funds into my ISA but I had forgotten that I had already contributed to the ISA when it was with FD before I moved it to HSBC, and so miscalculated how much I could contribute.

Effectively they only allowed in the amount which was possible to be sent, and the remainder was moved into my current account.

You've over subscribed, so I would imagine they will either:
1. Move the excess amount from your Cash ISA into your current account (if you have one with them)
2. Charge you tax on that excess amount (i.e. whatever you've paid over, you'll be taxed on it)
3. Do both of the above

For now keep the reference numbers on hand - you've done what you needed to an alerted both banks and HMRC so if they say anything you can tell them that you alerted them to the over subscription, but the banks got no where with it.

[Deleted User]

Thanks for the speedy reply. Unfortunately the cash ISA is a two year fixed account with no withdrawals except closure. I'd like to keep it as it pays 2.4%.

Naf

jimjames wrote: »

In fact you'll be better off to take the whole amount out of the cash ISA and put it in a better paying current account

Not sure that's true long-term; although who can say. The money in the ISA will be tax free forever ( possible stupid government fiddling aside). If its in a current account this year, it can't be added to the ISA later. If (its a big if at this point, granted) rates go up in the future, using the current account now won't have been a good idea.

But no guarantees either way.

Alter_ego

I opened an Isa by mistake (tax year mix up) The result was that I had 2 maxed cash Isa's in the same year. Both were fixed term. Banks would/could do nothing. Eventually HMRC contacted me and bank instructing closure of one. This was done, bank paid gross interest and I was responsible for declaring for tax.
Banks send returns with your NI number and eventually HMRC acts.
No penalty, no problem.

Rich2808

If it's an honest mistake just let HMRC know. I can't believe the lost tax revenue on £2760 of funds earning 2 per cent is going to bankrupt the country.

When you see the mass tax dodges going on involving millions you might think HMRC might have other things to focus on.

I think this is going to get more common given we now have up to 5 different ISA types. £15240 is not exactly an easy limit to work with - when it moves to £20k it should be easier.

dunstonh

Wait and see what happens. Once the providers report the contributions to HMRC, they will write out to say what they want to happen. Sometimes it will be a refund of the overpayment. However, if its a first time error under the NI number, then often they just issue a warning not to do it again. It can depend on the amount involved. yours is quite a lot of overpayment.