Capital gains, dividends and savings tax in 2026/27: the allowances and how to use them
CGT at 18% and 24% with a £3,000 exemption, a £500 dividend allowance, savings allowances, and legal ways to shelter more
The tax-free allowances for investment income have been cut hard over the past few years. The capital gains exemption is a quarter of what it was and the dividend allowance a tenth. Many people who never used to think about these taxes now owe them on modest share portfolios or a second property. This guide sets out the 2026/27 figures and the ordinary, legal ways to keep more of the return. Investments are regulated, so this is information only, not personal advice.
Capital gains tax
You pay CGT when you sell or give away an asset that has risen in value: shares outside an ISA, funds, a second home, a buy-to-let, crypto assets, or valuables worth over £6,000. Your main home is normally exempt. The first £3,000 of gains each year is free. Above that, the rate depends on which income tax band the gain falls into once added to your income.
| Your band after adding the gain | CGT rate |
|---|---|
| Basic rate | 18% |
| Higher or additional rate | 24% |
A basic-rate taxpayer with a £10,000 gain pays 18% on £7,000, which is £1,260, provided the gain does not push them over £50,270. Any part that does is taxed at 24%.
Losses can be set against gains in the same year, and unused losses carried forward if you report them to HMRC within four years. Gains on UK residential property must be reported and paid within 60 days of completion. Other gains go on a self-assessment return, or through HMRC's real-time service if you do not file one.
Dividends
The first £500 of dividends is tax-free. Beyond that, dividends are taxed at 8.75% in the basic-rate band, 33.75% in the higher-rate band and 39.35% above £125,140. Dividends sit on top of your other income when working out the band.
Someone with a £30,000 salary and £2,500 of dividends pays 8.75% on £2,000, which is £175. If dividends take you over £10,000 a year you must file a return. Below that, HMRC can collect the tax through your tax code if you tell them.
Savings interest
Interest is taxed as income, after the Personal Savings Allowance. With easy-access accounts around 4.5% to 5%, a basic-rate taxpayer uses up the £1,000 allowance with roughly £21,000 of savings, and a higher-rate taxpayer the £500 allowance with about £10,500. Banks report interest to HMRC, which adjusts your tax code or sends a Simple Assessment.
Low earners get an extra £5,000 starting rate for savings at 0%, reduced pound for pound by non-savings income above £12,570. Someone with £14,000 of pension income and £4,000 of interest pays no tax on the interest.
Legal ways to shelter more
Use the ISA allowance every year. Interest, dividends and gains inside an ISA are tax-free and need not be reported. The allowance is £20,000 in 2026/27 and cannot be carried forward. From 6 April 2027 the cash ISA portion falls to £12,000 for under-65s, so anyone planning a large cash ISA deposit has one more full year at £20,000.
Bed and ISA. Sell shares held outside an ISA, using the £3,000 exemption to cover the gain, and buy them back inside an ISA. Future growth is then sheltered. Do this each year rather than in one large disposal.
Transfer assets to a spouse. Transfers between married couples and civil partners are free of CGT. That lets you use two £3,000 exemptions, two £500 dividend allowances and two savings allowances, and have gains taxed at the lower earner's rate. The transfer must be outright; the receiving spouse genuinely owns the asset.
Time your disposals. A gain of £5,500 split across 5 April and 6 April uses two years' exemptions. Selling in a year when your income is lower, such as after retirement, can drop the rate from 24% to 18%.
Pension contributions. They extend the basic-rate band, which can pull a gain or dividend from the higher rate into the basic rate.
Premium Bonds and NS&I. Prizes are tax-free and the prize fund rate is 4.35% from the September 2026 draw, though returns are not guaranteed.
Watch out for
- Selling shares and repurchasing the same ones within 30 days. The bed and breakfast rule matches the sale to the repurchase and the gain is not crystallised.
- Missing the 60-day property reporting deadline. Penalties and interest apply.
- Forgetting that dividends and gains count towards the £100,000 Personal Allowance taper and the £60,000 Child Benefit charge.
- Assuming a spouse transfer is a formality. It is a real change of ownership, which matters if the relationship ends.