2026/2027 tax allowances, what’s changed?

As the new tax year begins, it’s easy to lose track of what’s changed - and what hasn’t. While many allowances remain frozen, that doesn’t mean they’re any less important. In fact, with thresholds unchanged and tax pressures creeping up in real terms, making full use of your allowances is more valuable than ever.

The start of the tax year is a good opportunity to reset, review your finances, and ensure you’re making the most of what’s available.

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What’s not changed?

Investment and pension allowances

• ISA allowance - for the tax year 2026/27, you can save up to £20,000 into one or multiple Individual Savings Accounts.
• Annual pension allowance - the annual pension allowance remains £60,000. For most people, the amount you can save into your pension before you have to pay tax is known as the annual allowance. Contributions made by you, by your employer or made on your behalf by someone else all count towards this allowance. The amount you can save into your pension and claim tax relief on your own contributions is the highest of the following amounts that is relevant to you:
  • £60,000;
  • 100% of your earnings if you earn less than £60,000;
  • £3,600 if you have very low or no earnings.

You should note that the level of your annual allowance may be lower than the standard amount if you are a high earner or if you start to draw on any of your pension pots.

• Carry forward rules - unchanged, so you might be able to use unused allowance from the previous three tax years. This can increase the amount of annual allowance available, although it does not automatically increase the amount of personal contributions that qualify for tax relief beyond your earnings.
• Money Purchase Annual Allowance - remains at £10,000 if you’ve flexibly accessed certain defined contribution pension benefits. This does not apply to every pension payment, and some payments - such as taking tax-free cash on its own - do not trigger the MPAA.
• Junior ISA allowance - you can still save up to £9,000 across a cash JISA and a stocks and shares JISA. You can split this between both types of account in any combination, as long as you don’t exceed the overall allowance.
• Junior SIPP allowance - continues at £2,880 this tax year with tax relief increasing the total contribution to £3,600.

Tax allowances and thresholds

• Inheritance tax thresholds - the nil-rate band (£325,000) and residence nil-rate band (£175,000) remain unchanged. These are frozen up to and including the 2030/31 tax year.
• Gifting allowances - remain the same including the £3,000 annual exemption (if you haven’t used this in the preceding tax year, it can be carried forward, giving you a total allowance of £6,000). This also includes small gifts of up to £250, gifts from surplus income and wedding gifts of £5,000 from parents, £2,500 from grandparents and £1,000 from others.
• Capital Gains Tax allowance - no changes to the CGT allowance, meaning the total profit you can make from selling assets like shares or property (excluding your main home) before Capital Gains Tax is due is still £3,000 for individuals and personal representatives, and £1,500 for most trustees.
• Personal allowance and thresholds - the Personal Allowance remains at £12,570. For taxpayers in England, Wales and Northern Ireland, there are also no changes to the higher-rate threshold of £50,270 and the additional-rate threshold of £125,140. Scottish income tax bands for earned income are different.
• Personal savings allowance - this tax year the amount you can earn on interest from savings without paying tax is still the same: £1,000 for basic rate taxpayers and £500 for higher rate taxpayers.
• Dividend allowance - the amount of dividend income you can receive without paying tax remains at £500 for the 2026/27 tax year.
• Marriage allowance - you can still transfer £1,260 of your personal allowance (the amount you can earn before paying tax) to your spouse or civil partner if you’re the lower earner. The lower earner must normally have an income below their personal allowance of £12,570.

What’s changed?

• Dividend tax on investments held outside an ISA or pension - the amount of dividend income you can receive without paying tax still remains at £500 for the 2026/27 tax year. However, the basic and higher rates of non-ISA dividend income above this are set to increase by 2 percentage points. The new rates on dividend income will be at 10.75% (previously 8.75%) for basic rate taxpayers, and at 35.75% (previously 33.75%) in the higher rate tax band. The rate for additional rate taxpayers of 39.35% remains the same.

What to think about this tax year?

• Maximise cash ISA contributions - The government has announced that from 6 April 2027 it intends to introduce a £12,000 annual cash ISA subscription limit for investors under 65, while remaining at £20,000 for those aged 65 and over. As a result, this tax year may present an opportunity to maximise cash ISA contributions before that lower limit takes effect. It’s worth noting that these rules could be subject to change before implementation.
• Review your pension - from 6 April 2027, the government plans to bring most unused pension funds and some death benefits into scope of Inheritance Tax, although death-in-service benefits from a registered pension scheme will be excluded. This brings more pensions into scope, so it’s worth reviewing whether your pension strategy still aligns with your estate planning goals. Make sure your beneficiary nominations are up to date, as these are key in determining who receives your pension benefits. To update an existing beneficiary you can simply log in to your account and navigate to Profile>Pension Setting>Add Beneficiaries or you can use the Expression of Wish application form to nominate beneficiaries.
• Using your allowances - many allowances follow a ‘use it or lose it’ rule. This means you can’t carry them over into the next tax year. Make sure - where you can - you’re using all of your available allowances.

Read: Your tax-saving toolkit

Read: Want to be tax-efficient but don’t know where to start?

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Important information - investors should note that the views expressed may no longer be current and may have already been acted upon Tax treatment depends on individual circumstances and all tax rules may change in the future. Junior ISAs are long term tax-efficient savings accounts for children. Withdrawals will not be possible until the child reaches age 18. A Junior ISA is only available to children under the age of 18 who are resident in the UK. It is not possible to hold both a Junior ISA and a Child Trust Fund (CTF). If your child was born between 1 September 2002 and 2 January 2011 the Government would have automatically opened a CTF on your child’s behalf. If your child holds a CTF they can transfer the investment into a Junior ISA. Please note that Fidelity does not allow for CTF transfers into a Junior ISA. Parents or guardians can open the Junior ISA and manage the account but the money belongs to the child and the investment is locked away until the child reaches 18 years old. Withdrawals from a pension product will not be possible until you reach age 55 (57 from 2028). This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.