The new tax change you probably missed

The value of your investments and the income you receive from them can go up and down, and you may get back less than you invest. Any examples are for illustration purposes only. ISA eligibility and tax rules apply.

The turn of the tax year doesn’t tend to carry with it parties or fireworks (shocking, I know) but it does generally bring in a raft of personal tax rule changes for UK investors.

The birth of the 2026/27 tax year came with one notable update but, arguably, the bigger story lies in what hasn’t changed at all. Let’s kick off with what’s new in tax world before we dig into the nuance behind what has stayed the same, and why you need to take note.

The headline change this tax year is around investment income. We all still have a £500 dividend allowance to make use of but if you earn any more than that, the tax you’ll have to pay might look a bit different now.

It’s not an enormous uplift for basic-rate and higher-rate taxpayers but the more prevalent point for me is around the amount of investors likely to slip into tax territory this year.

While long-term income hunters are hopefully seeing their accounts grow in the background, casting off dividend income when it appears, that tax-free dividend allowance has only been shrinking. In 2022/23 we had a £2,000 dividend allowance, which halved to £1,000 in 2023/24, halving again to £500 in 2024/25. If investors haven’t kept up with the changes they could face a perfect storm of growing dividends and reduced allowances, meaning they’re constantly edging towards paying UK dividend tax or are maybe even already liable for it without even knowing.

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It’s something ISA investors don’t have to worry about though. If you hold dividend-paying shares in a stocks & shares ISA, any income you receive doesn’t attract UK dividend tax. So, with investors interested in dividend stocks being squeezed from both sides, if you haven’t thought about making the same investments tax efficient in an ISA, it might be worth considering.

Stocks & shares ISA crypto experiment reversed

While we’re here, it’s a good chance to talk about another change that slipped in this tax year. The short-lived ability to buy crypto exchange-traded products (ETPs) inside a stocks & shares ISA has ended. If you do hold one of these products in a stocks & shares ISA, you might still be able to hold it, just not top it up. It’s worth checking with your provider what their own rules are too.

Does that mean tax-efficient crypto exposure is off the table? Not quite. Crypto mining stocks and listed treasury companies can still be held in stocks and shares ISAs, with a few of the more well-known names regularly appearing among the most popular stock buys on Robinhood UK.

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There are a few more niche tax changes that could affect those inheriting money or selling a business but we’re keeping it mainstream here.

You could stop reading there but you’d miss the subtleties behind the rest of tax land that looks the same yet isn’t quite.

For clarity:

• The general ISA allowance has stayed at £20,000, with savers and investors able to split their annual contributions across the different flavours of ISA and open more than one stocks & shares ISA during the tax year. The annual Lifetime ISA (LISA) limit is still £4,000 and forms part of the overall £20,000 annual ISA allowance.
• The standard pension annual allowance is still £60,000 (or equal to 100% of your annual earnings if lower than £60,000) for retirement-focused investors.
• The capital gains tax (CGT) allowance is staying at £3,000. Investors selling shares for a profit above this level will have to pay tax depending on which tax band they fall into: 18% for basic-rate taxpayers and 24% for higher and additional-rate taxpayers.

And it’s that last point that carries a similar vibe to our dividend tax example. Go back to 2022/23 and the UK CGT allowance was £12,300. That fell to £6,000 the year after and to £3,000 the year after that. And, after years of basic-rate taxpayers paying 10% tax and higher/additional-rate taxpayers paying 20% tax on gains above the allowance, from October 2024 those rates have sat at 18% and 24% respectively. It paints a picture of falling allowances and rising taxes, which could hit long-term investors whose gains would attract a lot more tax than expected, if sold.

Again, it highlights just how important it is to think about using a stocks & shares ISA, as investments inside the tax wrapper don’t attract UK investment taxes. It also takes the pressure off tax calculations and HMRC paperwork, giving investors one less thing to worry about.

Important information

When investing, your capital is at risk. The value of your investments, and the income you receive from them, can go down as well as up and you may get back less than you invest. Forecasts aren’t a reliable guide to future results or returns.

Make sure to do your own research on what investments are right for you before investing or consider seeking expert financial advice. Please note that this article is meant for information and does not constitute any financial advice. This is not an offer, recommendation, inducement or invitation to buy, sell, or hold any securities, or to engage in any investment activity or strategy.

Robinhood doesn’t provide tax advice. You should seek advice if you have any questions regarding the impact your investments will have on your income tax and tax filing requirements.