What happens if you put too much in ISA?

[UTH]

If you've maxed out how much you can put into an ISA for that financial year and you accidentally (or on purpose?) move some more money into it, what actually happens? As far as I'm aware you can put £20k per year into one, is that right? So if you try and put another £1k in there, what happens? Maybe I'm being dumb and it's a very straight forward answer?

[Notsofastfrank]

If you don’t rectify the error yourself, the ISA office will catch up with you about 18 months later and advise the provider of the second “illegal” ISA to cancel it.

[Tye Green]

I've got 2 ISAs on different platforms and in one year I made the mistake of putting more than £20k total into them. In ISA #1 on platform X I put £20k and in ISA #2 on platform Y put £5k. nothing has been said though I suppose it will come out in the wash at some point since they all revolve around the same NI number.

son also has 2 ISAs - stocks and shares + LISA - both on HL. his annual limit of £20k was reached by putting the max amount in spread across both ISAs but he thought that he was allowed to put £20k in the S&S ISA as well as the max amount in the LISA. HL's system pulled him up and wouldn't let him proceed.

so, my take on this is: different platforms don't talk to each other but the big algorithm in the sky will get you later

[UTH]

Gotcha, so if you're aware you're doing it.....don't do it!!

Thanks guys.

[softtop]

no one has actually answered the question.

[uknick]

If you overpay into ISAs in a tax year, the rules say HMRC will contact you to tell you to pay tax on any interest gained from the excess amount.

Have a look at this thread;

https://community.hmrc.gov.uk/customerforums/pt/b3...

[UTH]

uknick said:

If you overpay into ISAs in a tax year, the rules say HMRC will contact you to tell you to pay tax on any interest gained from the excess amount.

Have a look at this thread;

https://community.hmrc.gov.uk/customerforums/pt/b3...

Hmmmm......forgive me as I'm not overly clued up on all things finance.....but does that mean it's still better to put my money into the ISA at, say 4.5% and pay tax on the excess amount, than put it somewhere that's paying, say, 2%?
I guess what I'm asking is if I'm going to get fined/penalised for putting more into the ISA? Because it sounds like it's still the best place for all my money to be if the ISA has the highest rate?

[Steve H]

UTH said:

uknick said:

If you overpay into ISAs in a tax year, the rules say HMRC will contact you to tell you to pay tax on any interest gained from the excess amount.

Have a look at this thread;

https://community.hmrc.gov.uk/customerforums/pt/b3...

Hmmmm......forgive me as I'm not overly clued up on all things finance.....but does that mean it's still better to put my money into the ISA at, say 4.5% and pay tax on the excess amount, than put it somewhere that's paying, say, 2%?
I guess what I'm asking is if I'm going to get fined/penalised for putting more into the ISA? Because it sounds like it's still the best place for all my money to be if the ISA has the highest rate?

If you can get an ISA at a fixed 4.5% you will generally be able to get a "normal" account at at least the same rate. And if you are after decent growth over a longer period you should probably look at things with more potential than a fixed rate account…….


But on the tax side, as with many of these things, you may get away with it but it comes down to if you want the hassle that could come from getting caught.

[bitchstewie]

softtop said:

no one has actually answered the question.

I don't think there is a single consistent answer.

Anecdotally most times when I've read someone saying they've done this and what should they do, if they end up contacting HMRC the answer seems to simply be that they're told not to do it again.

That seems to assume a genuine one-off accident and not taking the piss by trying to deposit two lots of £20K and claiming you "forgot" etc.

Never read of anyone try it on to that extent though.