It also marks a financial reset – with renewed allowances, opportunities to protect savings from tax and, this year especially, a few changes worth planning for early.
Here’s what’s changed, what’s stayed the same, and how to make the most of the 2026/27 tax year.
Use your ISA allowance
The annual Individual Savings Account (ISA) allowance remains at £20,000 for the 2026/27 tax year. This is the total you can contribute across all your ISAs each year while sheltering savings and investments gains from income tax, dividend tax and capital gains tax.
However, this tax year will be the last tax year in which you can put the full £20,000 into a cash ISA.
Aldermore was voted the best cash ISA provider in the 2026 Your Money Personal Finance Awards. Hargreaves Lansdown, Best Invest, Invest Engine, Charles Stanley and Moneyfarm all won awards for their investment ISAs in the 2026 Your Money Investment Awards.
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From 6 April 2027, the annual cash ISA allowance for individuals under 65 will be reduced to £12,000 as part of a government move to encourage investment. The total £20,000 ISA allowance will remain, but the remaining £8,000 must be used for stocks and shares or innovative finance ISAs.
If you’re aged 18 to 39 you can open a Lifetime ISA (LISA) and contribute up to £4,000 of your ISA allowance each year. You’ll receive a 25% bonus from the Government (up to £1,000 a year) until the age of 50. However, the money must be used to buy a first home or to save for retirement.
Parents looking to build a tax-efficient nest egg for their children should also consider making the most of the Junior ISA allowance. In the 2026/27 tax year, you can save up to £9,000 per child into a Junior ISA.
The money grows free from income tax and capital gains tax, with the account is locked until the child turns 18 and the money becomes legally theirs. Nottingham Building Society was voted the best junior ISA provider in the 2026 Your Money Personal Finance Awards.
Whatever you’re saving or investing for, using your ISA allowance earlier in the year means your money has longer to grow tax-free.
Don’t forget pension tax relief
Pensions remain one of the most generous tax shelters available. Most people can contribute up to £60,000 a year (or your total earnings, if lower) into pensions while receiving tax relief. Unused allowances from the previous three tax years can be carried forward if you were a member of a pension scheme during those years.
Tax relief means the Government effectively tops up your pension contributions. Basic-rate taxpayers get 20% relief automatically, so a £80 contribution becomes £100 in their pension. Higher-rate and additional-rate taxpayers can claim further relief through their tax return.
For those able to afford it, making contributions earlier in the tax year allows investments more time in the market.
Wealthify won the best Pension Platform (Small Portfolio) at the 2026 Your Money Investment Awards, while Interactive Investor triumphed in the Pension Platform (Medium Portfolio) category.
Capital gains tax (CGT) allowance is now much smaller
The Government has been quietly squeezing the tax‑free allowances for investors, and this year’s thresholds are the tightest yet.
The annual CGT allowance now stands at £3,000, down from £12,300 just a few years ago. This means more investors may find themselves liable for CGT when selling shares, funds or other investments held outside an ISA or pension.
If you have investments in a general investment account, it may be worth reviewing them early in the tax year to see whether gains could be realised within the allowance.
Married couples and civil partners can transfer assets between them without triggering tax, allowing both partners’ allowances to be used.
Dividend tax allowance reminder
Income from dividends also has a small tax-free allowance, although it has been cut significantly. The dividend allowance now stands at £500 — a fraction of the £2,000 available only a couple of years ago.
In addition, an increase to the dividend tax rate kicked in from 6 April 2026. Dividend tax went up from 8.75% to 10.75% for basic rate taxpayers, and from 33.75% to 35.75% for higher rate taxpayers. The additional rate remains unchanged at 39.35%.
This means investors holding dividend-paying shares outside tax wrappers now face a growing tax bill. Holding dividend-paying investments inside an ISA or pension avoids this problem entirely.
Moneyfarm, Wealthify, Aviva, and Plum all won awards for their investment platforms at the 2026 Your Money Investment Awards.
Consider ‘bed and ISA’ or ‘bed and pension’
If you have investments sitting outside a tax wrapper, the start of the tax year can be a good time to consider a strategy known as “bed and ISA.”
This involves selling investments held in a taxable account (such as a general investment account) and immediately repurchasing them within an ISA using your annual allowance. The process effectively moves your investments into a tax-free environment where future income and gains will not be taxed.
Some platforms offer automated bed and ISA services that handle the transactions for you. However, investors should be mindful of dealing costs and any capital gains tax that could arise when selling investments, particularly given the smaller CGT allowance.
A similar strategy, known as “bed and pension,” involves selling investments and reinvesting the proceeds inside a pension. This approach can be particularly attractive because pension contributions benefit from tax relief. However, the trade-off is that pension money is usually locked away until at least age 55 (rising to 57 in 2028).
Start early to spread contributions
Although the tax year has already begun, there is still plenty of time to make the most of your 2026/27 allowances. Financial planners often recommend contributing regularly throughout the year rather than waiting until the end.
Taking a few minutes now to review your savings, investments and pension contributions could help ensure you make the most of all the tax breaks available.
