Tax Allowances 2025/26
See all the tax-free allowances HMRC gives you and how to maximize them.
Key Allowances at a Glance
ISA
£20,000
Tax-free growth in investments
Capital Gains Tax
£3,000
Tax-free gains on asset sales
Dividends
£500
Tax-free dividend income
Trading Allowance
£1,000
Tax-free self-employment income
Property Income
£1,000
Tax-free rental income
Marriage Allowance
£252
Tax saving if transferring allowance
Detailed Guide to Each Allowance
ISA (Individual Savings Account)
£20,000
Capital Gains Tax (CGT) Annual Exemption
£3,000
Dividend Tax-Free Allowance
£500
Trading Allowance (Self-Employed)
£1,000
Property Income Allowance
£1,000
Marriage Allowance
£252/year
Personal Allowance Taper (High Earners)
Standard Personal Allowance
Amount
£12,570
Applies if
Adjusted income under £100,000
Tapered Personal Allowance
Taper rate
£1 per £2 over £100k
Reduced to zero at
£125,140 adjusted income
📌 Adjusted income = Total income minus certain reliefs (e.g. pension contributions). This is higher than taxable income!
ISA Types Explained
Cash ISA
• Interest earned is completely tax-free
• Money available whenever you need it
• Currently better rates than taxable savings
• Max £20k/year (separate from S&S ISA)
Stocks & Shares ISA
• Dividends and capital gains completely tax-free
• Invest in shares, funds, ETFs, bonds
• Higher growth potential long-term
• Max £20k/year (combined with Cash ISA)
Lifetime ISA (Age 18-39)
• Government adds 25% bonus on your contributions
• £4,000/year max (£1,000 bonus from government)
• For first home purchase or retirement at 60+
• Part of your £20k annual limit
Junior ISA (Under 18)
• Parents save tax-free for children
• £9,000/year limit (separate from adult ISA)
• Child controls it at age 16
• Own separate £20k limit to grow
Common Mistakes People Make
! Not using ISA allowance
Leaving £20k unused each year means losing tax-free growth forever
! Forgetting the £500 dividend allowance
Even small amounts of dividends count - this is a free allowance
! Mixing ISA accounts
Can only pay into one Cash ISA and one S&S ISA per tax year (not both)
! Not claiming Marriage Allowance
One partner can transfer their unused allowance for up to £252/year
! Claiming too many allowances
Trading allowance OR actual expenses (not both) - choose whichever saves more
! Missing the deadline
Some allowances reset on 5 April - unused balance is lost forever
Important Dates 2025/26
End of current tax year
Tax year 2024/25 ends
Start of new tax year
Tax year 2025/26 begins - all allowances reset
ISA deadline for claim
File Self Assessment for early tax refund claim
Tax deadline
Self Assessment deadline & tax payment due
End of 2025/26 tax year
Last day to use annual allowances from this year