Paid too much into ISA for 19/20

Penguin666

Hi,

I’ve just paid 30k into various ISA’s for this tax year by mistake. I spoke to each company and they each said I should inform the HMRC. I called them and they didn’t show much interest and said the providers need to deal with it but they all seem a bit vague in terms of what I need to do - A Grey area shall we call it.

I thought that I could simply withdraw 10k from the cash ISA and the problem was solved unless I made in profit of course, which I haven’t as yet.

Advice is appreciated.

Thanks

Reaper

From q quick Google:

9) What if I've paid too much into my ISA?
If you've accidentally exceeded the maximum amount you can pay into an ISA in any tax year, you won't be entitled to any tax relief on these excess payments. Don't worry about putting your mistake right yourself - HMRC should get in touch with you after the end of the tax year to let you know what you need to do.

https://www.moneysupermarket.com/money-made-easy/your-isa-questions-answered/

Or more comprehensive answer here:
https://www.telegraph.co.uk/investing/isas/exceeded-2017-isa-limit-should-do/

AnotherJoe

So op might as well rectify by withdrawing the last 10k he put in.

masonic

AnotherJoe wrote: »

So op might as well rectify by withdrawing the last 10k he put in.

Only if this ISA allows flexible withdrawals. In practice, making a flexible withdrawal from any of the ISAs would prevent there being an issue at the end of the tax year - if any of the ISAs is flexible.

If none of the ISAs are flexible, then withdrawing £10k will have no impact on the over-subscription and the ISA containing the excess subscriptions would still be invalid and potentially voided whether a withdrawal is made or not. Only a withdrawal made by the ISA manager or HMRC following the formal 'repair' process can correct this issue, so no action should be taken by the account holder. The comment in the Telegraph article does not fill me with confidence that is how things would play out - and it is contrary to HMRC's official advice regarding this situation.

One possible outcome is that HMRC will take no action at all, but warn against doing this again, though this is somewhat less likely with a £10k oversubscription.

Penguin, since you mention paying into "various ISA's", I'm minded to double check this was limited to one ISA of each type?

jamesd

It's the final 10k paid in that's invalid. It's fairly common to have cancellation periods of 14-28 days. To properly tell you what to do we need to know for each account:

1. when money was paid in
2. how much
3. details of any cancellation period
4. whether it offers the optional ISA flexible withdrawing feature
5. any costs for using 3 or 4