Messed up my ISA allowances

isasmurf

Money_Grabber13579 said:

jimjames said:

aroominyork said:

From your money.com: “If you realise you’ve done this then you shouldn’t attempt to just withdraw money from one ISA yourself. Instead you should call HMRC’s ISA helpline on 0300 200 3300 to explain the situation. HMRC will work out which ISA had the payment into it that breached the limit and will reclaim the money. They will also charge you for any tax owed.” Are you sure I should ignore that and just withdraw the cash?

Yes, that doesn't take account of the flexible ISA rules. You can pay money into and remove from a flexible ISA over the year and it won't affect your total allowance as long as the balance is £20k or under at the end of the tax year. 

Is that not open to abuse? Presumably if someone had £200k to invest, they couldn’t open 10 flexible isas, deposit £20k in each on 6th April and then fully withdraw the funds from 9 of them the following 5th April? Is the case that the interest on the additional isas gets taxed and if so, how does that get picked up?

Even if you withdraw all the money from the ISAs each one will still be reported to HMRC as an active cash ISA so you will have deemed to have breached the '1 ISA of each type a year' rule. All accounts opened after the first ISA will be invalid and interest earned be deemed to be outside the ISA.