An ISA over subscription is when you pay more than £20,000 into your ISA allowance* in one tax year. This can happen if you:
- Subscribe more than £20,000 across multiple ISA accounts, or
- Have a Direct Debit that amounts to more than £20,000 at the end of the tax year
When making instant or portfolio transfers into your ISA with InvestEngine, the system will notify you that you’re already at your ISA limit to prevent oversubscription.
*£20,000 is the tax year allowance for 2024/25 and 2025/26
What happens if I oversubscribe my ISA?
If you notify us of the breach within 30 days, we can void the transaction(s). If the breach is discovered after 30 days, we must repair the ISA by:
- Removing the excess subscription,
- Identifying and removing any related investment gains or income.
What do you need from me?
Once we've identified an oversubscription, we'll:
- Provide you with a breakdown of the excess amount, affected investments, and any related gains or income.
- Supply relevant reports (Cash Statement, Trading Statement, CGT Report) to help you assess the situation.
- Ask for your confirmation on which subscriptions to remove.
You will need to tell us which investments you wish to remove from your ISA.
What reports will I need?
You can download these relevant reports from your account:
- Cash Statement: Includes any dividends received (no tax is deducted).
- Trading Statement: Details the purchase cost, acquisition dates, and fees for affected investments.
- CGT Report: Lists sale dates, sale proceeds, and disposal-related costs.
These will help you or your accountant calculate any tax owed outside the ISA wrapper.
How do you determine which investments were made using oversubscribed funds?
We trace the path of your ISA contributions and identify:
- When your total contributions exceeded £20,000.
- Which investments were made using the excess funds after that point.
- Any dividends, reinvestments, or proceeds from those investments.
If you made multiple oversubscriptions, this process is repeated for each one.
What happens after I confirm the investments to remove?
Once we receive your confirmation:
- The identified oversubscription (including related gains and income) will be removed from your ISA.
- These amounts will be transferred into a General Investment Account (GIA) in your name.
This ensures your ISA remains compliant with HMRC rules.
Will I be taxed on the oversubscribed amounts?
Once removed from your ISA, these investments lose their tax-free status. You may be liable for:
- Capital Gains Tax (CGT) on any profits.
- Income Tax on dividends or other earnings.
We advise speaking with a tax professional for personal advice.
What if I subscribed to another provider as well?
HMRC rules apply to the total across all providers. Even if each provider accepted subscriptions under £20,000, the total must not exceed the annual limit. We will assist with correcting the oversubscription related to your ISA with us; HMRC may contact you regarding your overall ISA usage.