IF MORE THAN ONE ISA OPENED IN A YEAR

BennyBirdie

Hello, I am new here.

Say a person was to place in one tax year £40,000 in two different ISAs, (£20,000 in each), would they pay tax on the interest?🐎

Ocelot

ISA returns are reported to HMRC like other accounts, so yes.

Albermarle

There would be no point doing this, as it would cause a big admin mess with the providers and HMRC at some point in the future. Plus a tax bill.

Just stick to £20K in an ISA per tax year, and use non ISAaccounts for anymore.

Newbie_John

You can do that in few ways:

1. £20k to your ISA and £20k to your partner
2. £20k new money and £20k transferred from previous ISA
3. Break it over April to use two tax years

FrugaiMacDugal

https://forums.moneysavingexpert.com/discussion/6655733/if-more-than-one-isa-opened-in-a-year

You are only allowed £20k new money each tax year in an ISA, all interest in an ISA is tax free.

jimjames

https://forums.moneysavingexpert.com/discussion/6655733/if-more-than-one-isa-opened-in-a-year

If you are deliberately putting £40k into ISAs then that is breaking HMRC rules and HMRC will be looking at your breach after the end of the tax year once it is reported to them so you could incur penalties as well as paying tax.

eskbanker

https://forums.moneysavingexpert.com/discussion/6655733/if-more-than-one-isa-opened-in-a-year

If you do this, the providers concerned will report the contributions in their annual submissions to HMRC, who will then spot the issue in their compliance checks and determine what action, if any, to take thereafter.

Anecdotally, they'll often forgive 'first offenders' if they make a simple minor mistake, but deliberately trying to double your allowance is unlikely to be treated leniently, so the more likely response would indeed be to treat the income from the second ISA as taxable, and bill you accordingly.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81888304#Comment_81888304

Are penalties chargeable in such circumstances, either theoretically or in practice (i.e. any reports of this actually happening)?