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how much will you get taxed on a cash isa if you go over your tax free allowance

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adampember | 15:26 Fri 24th Aug 2012 | Business & Finance
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I have a loyalty reward isa with barclays which says you can save up to £5,620 tax free per year. so i was wondering how much tax would i pay if i went over this amount by about £500.

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They return the excess money to you. I know because it happened to me when the limits were lower and i used to transfer spare money in (different amounts) each month and I hadn't realised I was so close to the limit. If it's an online account it should be detected when you try to transfer the money in so it shouldn't be possible to exceed the limit with one...
16:06 Fri 24th Aug 2012
I thought if you paid in too much they just transfered the excess to another account like a current account.
If the ISA is with Barclays then then Barclays should stop you depositing more than what is allowed by law.
I have a friend who's mother deposited the maximum amount in a cash isa and went down with dementia in the October I think.
He thought he knew what money his mother had and went and opened a cash isa for her in the February when the LPA came into force not realising the mother had put the maximum in the previous April with a different bank.
He just got a warning letter from the Inland Revenue but was allowed to keep both ISA'S.
The letter did however say if it happened again all ISA money would be taxed that year.
You cant go over that amount its the ISA Rules governed by HMRC
They return the excess money to you. I know because it happened to me when the limits were lower and i used to transfer spare money in (different amounts) each month and I hadn't realised I was so close to the limit. If it's an online account it should be detected when you try to transfer the money in so it shouldn't be possible to exceed the limit with one account.
In the case where someone had already reached the limit and then opened another in error they wouldn't have been allowed to keep the money in the second ISA as the limits are strictly enforced once it has been discovered that they have been breached

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