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Personal pensions: Annual allowance for tax relief
The Annual Allowance is the maximum amount that can be paid into all of your pensions, including tax relief, without incurring a tax charge.
| Tax Year | Annual Allowance |
|---|---|
| 2025/26 | £60,000 |
| 2026/27 | £60,000 |
Your annual allowance might be lower if you have:
- flexibly accessed your pension pot
- a high income
Flexibly accessing your pension (e.g., taking cash from a drawdown fund or via a pension lump sum) may lower your annual allowance to the money purchase annual allowance.
Money purchase annual allowance
This applies where a scheme member has flexibly accessed any of their pension benefits.
| Tax Year | Amount |
|---|---|
| 2025/26 | £10,000 |
| 2026/27 | £10,000 |
You’ve gone above the money purchase annual allowance in the current year if you’ve paid over £10,000 into all of your defined contribution pensions from either:
- The day after you first flexibly accessed your pension to the end of the tax year,
- The whole of the tax year if you flexibly accessed it in a previous tax year
If you have a high income
You’ll have a reduced (‘tapered’) annual allowance in the current tax year if both:
- your ‘threshold income’ is over £200,000
- your ‘adjusted income’ is over £260,000
For detailed information, visit the gov.uk website.
Stocks and shares ISA
The ISA allowance is the maximum amount you can subscribe across all ISA types (stocks and shares, cash, lifetime, Innovative Finance) in a single tax year.
| Tax Year | Annual ISA Allowance |
|---|---|
| 2025/26 | £20,000 |
| 2026/27 | £20,000 |
ISA changes announced for April 2027
If you invest across both cash ISAs and your stocks and shares ISA, from April 2027 you will only be able to put a maximum of £12,000 into a cash ISA. Your remaining allowance (£8,000) must be invested in a stocks and shares ISA. If you are 65 or over, different rules apply, with the option to invest, put your full allowance into a cash ISA, or a mix of your choosing (up to the same £20,000 allowance).
Capital Gains Tax (CGT)
CGT is a tax on the profit you make when you sell or dispose of an asset that has increased in value. You do not pay tax on the growth from investments held in an ISA.
CGT Annual Exempt Amount
The Annual Exempt Amount is the amount of gain you can make before any CGT is due.
| Tax Year | Annual Exempt Amount |
|---|---|
| 2025/26 | £3,000 |
| 2026/27 | £3,000 |
CGT Rates
The rate of CGT you pay on gains above the annual exempt amount depends on the asset being disposed of and your Income Tax band. The rates for residential property and most other assets (such as shares) have been aligned following changes in the Autumn 2024 Budget.
| Taxpayer Income Tax Band | Rate (Residential Property and other assets) |
|---|---|
| Basic Rate | 18% |
| Higher Rate | 24% |
| Additional Rate | 24% |
Certain specific types of disposals carry different rates that will change between 2025 and 2027. For more information about Business Asset Disposal Relief, Investors’ Relief, carried interest and trustees & personal representatives rules, visit the gov.uk website.
Tax on dividends
Dividends are payments from a company to its shareholders. The rates of tax you pay on dividends depend on your Income Tax band.
Dividend allowance
The dividend allowance is the amount of dividend income you can receive before you have to pay tax. You do not pay tax on dividends from investments held in an ISA.
| Tax Year | Dividend Allowance |
|---|---|
| 2025/26 | £500 |
| 2026/27 | £500 |
Dividend tax rates (above the allowance)
| Taxpayer Income Tax Band | Tax Rate 2025/26 | Tax Rate 2026/27 |
|---|---|---|
| Basic Rate | 8.75% | 10.75% |
| Higher Rate | 33.75% | 35.75% |
| Additional Rate | 39.35% | 39.35% |
Tax on savings interest
Savings income includes interest earned from bank accounts, building societies, and certain investments. All interest received on assets held within ISAs is entirely tax free.
Personal Savings Allowance (PSA)
The PSA is the amount of savings interest you can earn tax-free, depending on your Income Tax band.
| Taxpayer Income Tax Band | Personal Savings Allowance |
|---|---|
| Basic Rate | £1,000 |
| Higher Rate | £500 |
| Additional Rate | £0 |
If you go over your allowance, you pay tax on any interest over your allowance at your usual rate of Income Tax.
From April 2027, the tax rate on savings income exceeding the Personal Savings Allowance (PSA) will increase to 22% for basic rate, 42% for higher rate, and 47% for additional rate taxpayers.
Starting Rate for Savings
If your non-savings income (e.g., salary, pension) is below a certain threshold, you may be eligible for the 0% starting rate on savings.
| Tax Year | Maximum Savings Income at 0% |
|---|---|
| 2025/26 | £5,000 |
| 2026/27 | £5,000 |
Note: The 0% rate is only available if your other income is low enough to make your total taxable income (excluding savings interest) less than the sum of the Personal Allowance and the Starting Rate for Savings limit.
Further Information and Support
For the most up-to-date and comprehensive information, please refer to the official sources below:
- GOV.UK – Personal pensions
- GOV.UK – ISA Allowances
- GOV.UK – Capital Gains Tax
Remember, the value of investments can go up and down, so you may get back less money than you put in. Tax depends on your individual circumstances and the regulations may change in the future.
