HMRC determines excess contributions through a systematic data-aggregation process. All ISA providers are legally required to submit annual reports to HMRC disclosing account holder details, National Insurance numbers, contribution amounts, and ISA types [1][2][3]. HMRC then consolidates this data across all providers to identify when an individual's total subscriptions exceed the annual limit (£20,000 for 2026/2027) or when they have contributed to multiple ISAs of the same type in a single tax year [4][2].

Individuals are not expected to self-report; HMRC's automated system flags discrepancies after the tax year ends and data processing is complete [1][2]. Once an oversubscription is identified, HMRC may contact the individual to allow them to query the information, or may directly instruct the ISA provider to remove the excess funds and calculate any tax owed on growth [1][3]. The provider then voids the invalid subscriptions, rendering any earnings on that portion taxable [1][2].