The Fixer: I've exceeded my ISA limit

What happens if you put too much cash into a tax-efficient ISA?


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Dear Fixer,
Last August, I opened a cash ISA and a stocks and shares ISA so that I could make the most of the higher ISA limit of £15,000 that came in last year.

However, in my efforts to maximise the amount I shelter from tax by saving regularly into the accounts, I think I have exceeded the limit for this tax year.

I have only gone over the maximum by a few hundred pounds, but I'm worried that I will get into trouble with HM Revenue & Customs as a result of my mistake.

Should I just take the extra I have paid in - about £350 - out of my cash ISA? Or should I contact HMRC and explain what I have done? Any advice would be greatly appreciated.

G Rees, Hereford

Dear Mr Rees,

It is very sensible to try to make the most of your annual Individual Savings Account (ISA) allowance, as if fail to use it in any tax year, it is lost for good.

It's also worth pointing out that it's what you pay into ISAs that counts towards the annual limit, not what they are worth later on.

However, any money you put into a tax-efficient ISA over and above the annual limit - £15,000 this year, rising to £15,240 for the 2015/2016 tax year - will not qualify for the related tax relief.

And trying to sneak it through is not an option, as all ISA providers have to submit statutory reports to HMRC every year.

My advice is therefore to contact the HMRC ISA Helpline on 0300 200 3312 as soon as possible to find out what action you need to take.

If it tells you to withdraw the extra cash, you could pay it into a high-rate savings account for the moment and invest it in either your current ISAs or new accounts opened after the start of the new tax year on April 6.

You can only open and pay into one cash ISA and one stocks and shares ISA in any one tax year, but you can keep these and open new accounts the following tax year if you wish.

The Fixer

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