Your 2025/26 tax allowance cheat sheet

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.

When it comes to investing, there are any number of aspects vying for your attention at any one time: global politics, market reactions, the companies underneath the share prices, long-term wealth maths and, of course, the accounts where you keep it all ticking over. Keeping tabs on everything can be a dizzying business so it’s useful to have the odd bookmark to come back to for a quick sense check.

So, here are some of the more popular tax topics for investors to keep in mind for the year ahead. Bear in mind tax is a personal thing so it’s more than likely you’ll need to factor in your own situation to make it more accurate for you - never hurts to have a jumping off point though. Bookmark away.

Tax-efficient investing

• ISA allowance
• Junior ISA (JISA) allowance
• Pension allowance

Investment gains and income

• Capital gains allowance
• Capital gains tax (CGT) rates
• Dividend tax rates
• Dividend allowance
• Personal savings allowance

Personal and family allowances

• Income tax bands
• Personal allowance
• Marriage allowance
• Gifting allowances
• Inheritance tax (IHT) thresholds

For the 2025/26 tax year, you can put up to £20,000 into individual savings accounts (ISAs). You can split your money across the different types of ISAs, including:

• Stocks and shares ISAs
• Cash ISAs
• Innovative Finance ISAs
• Lifetime ISAs (LISAs) - these are included within the £20,000 allowance, with contributions capped at £4,000 over the tax year

Any income or gains you make inside the account won’t attract UK capital gains tax or UK dividend tax (which means no dreaded paperwork either).

Junior ISA (JISA) allowance

Children have their own ISA allowance of £9,000 for the 2025/26 tax year. Parents and guardians can set up the JISA on their behalf and family and friends can contribute, up to the £9,000 annual limit. The child can start to manage the account when they turn 16 and they can withdraw the funds when they turn 18, at which point it turns into an adult ISA.

Most people can put up to £60,000 into their pension in the 2025/26 tax year and still receive tax relief (where the government tops up your contribution), or 100% of your earnings if you earn less than £60,000.

Special circumstances

1. You’ll receive a tapered annual allowance if you are a high earner. If:

• Your income minus the amount you pay into a pension (your ‘threshold income’) is over £200,000, and
• Your income plus what employer pays into your pension (your ‘adjusted income’) tops £260,000

Then your pension allowance may be reduced, potentially down to £10,000.

1. While it’s a case of ‘use it or lose it’ with your ISA allowance, there’s a ‘carry forward’ rule with pensions that allows you to use any unused allowance from the prior three tax years, providing you were a member of a pension scheme at the time.
2. The Money Purchase Annual Allowance (MPAA) applies if you start taking taxable income from a defined contribution (DC) pension, for example, by taking income through flexi-access drawdown or withdrawing taxable lump sums. The MPAA limits future contributions to £10,000 per tax year across DC pension schemes, with no ability to carry forward any unused allowance. A point that people often miss is that simply taking a tax-free lump sum on its own doesn’t trigger the MPAA.

You can make £3,000 in capital gains (profit from selling an investment) in the 2025/26 tax year before UK capital gains tax (CGT) kicks in. Any gains you make inside a tax-efficient account like an ISA or pension won’t attract CGT.

Capital gains tax (CGT) rates

The amount of tax you’ll pay, if you sell any stock market investments and make a gain over the £3,000 allowance, depends on your taxable income. You’ll need to factor in your personal situation as your gains could push you from one tax band into the next. Broadly, though, the rates are:

• 18% on the portion above £3,000 for basic-rate taxpayers (in the 20% tax band)
• 24% for higher and additional-rate taxpayers (in the 40% and 45% tax bands)

The dividend allowance for 2025/26 is £500. If you receive dividends above that value, dividend tax will apply. Just like CGT, any income you make inside an ISA or pension won’t attract UK dividend tax.

Dividend tax rates

Again, the rates you’ll pay on the payments you receive above £500 depend on your level of income:

• 8.75% for basic-rate taxpayers
• 33.75% for higher-rate taxpayers
• 39.35% for additional-rate taxpayers

If you have cash savings gathering interest outside a tax-efficient account like an ISA, that interest is allowed to grow to a certain extent, before you have to pay savings tax (the rates of which align with income tax bands i.e. 20%, 40% or 45%). Those allowance levels are:

• £1,000 for basic-rate taxpayers
• £500 for higher-rate taxpayers
• £0 for additional-rate taxpayers

We all have a certain amount of income we can earn before we have to start paying income tax. The personal allowance for the 2025/26 tax year is £12,570. If you start to earn more than £100,000, that personal allowance is gradually withdrawn - for every £2 you earn above the £100,000 threshold, you lose £1 of your allowance.

The UK (ex-Scotland) income tax bands for 2025/26 are:

Basic rate: 20% on income between £12,571 and £50,270 Higher rate: 40% on income between £50,271 and £125,140 Additional rate: 45% on income above £125,140

In the 2025/26 tax year, marriage allowance lets you transfer £1,260 of any unused personal allowance to your spouse or civil partner, provided one partner earns below £12,570 and the other is a basic-rate taxpayer.

You can give away £3,000 each tax year without it being considered for inheritance tax (IHT). You can also:

• Carry forward one year’s worth of unused allowance
• Give as many small gifts of up to £250 per person, as long as you haven’t used another allowance on the same person
• Give regular payments to another person as long as you pay from your regular monthly income and it doesn’t affect your standard of living. There’s no limit to how much you can give tax free and common examples include paying rent for a child or financially supporting an elderly relative

Gifts above these limits might still be tax free for IHT purposes but only if you live for seven years after granting them.

Inheritance is a detailed business and worth an article of its own but, for brevity here, the standard IHT threshold for a single person is £325,000 (aka the nil-rate band). This applies to the total value of your assets (property, money, investments, possessions minus any debt) and there’s an additional allowance (aka the residence nil-rate band) of up to £175,000 if you pass your home to your direct descendants. This effectively means a couple could potentially pass on up to £1m before IHT applies.

Any amount above these thresholds is usually taxed at 40%, with the residence nil-rate band tapered away for larger estates. If your estate is worth more than £2m, the allowance is reduced by £1 for every £2 above that level.

The seven-year rule

Most gifts above the annual allowances are treated as potentially exempt transfers (PETs). If you live for seven years after making the gift there’s generally no IHT to pay. If you die within seven years, some or all of the gift may be taxed. It’s worked out on a sliding scale but the general figure to keep in mind that triggers the whole thing is seven years.

Important information

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.

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.