Your 2025/2026 tax allowances: the basics

You probably don’t plan your life around the UK tax year – but your finances are still shaped by it. Unlike the calendar year, the tax year runs from 6 April to 5 April, and each one brings a fresh set of allowances that can help reduce the amount of tax you pay. Many of these are ‘use it or lose it’, so it’s worth knowing what’s available before the year resets.

To help, we’ve pulled together 10 key allowances worth understanding for the 2025/2026 tax year. These figures are correct at the time of publication, but allowances and thresholds can change, so it’s always wise to check for the latest updates.

Read about all the allowances in full or click from the list below:

1. ISA allowance
2. Pension allowances
3. Junior account allowances
4. Inheritance Tax thresholds
5. Gifting allowances
6. Capital Gains Tax allowance
7. Dividend allowance
8. Personal allowance
9. Personal savings allowance
10. Marriage allowance

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1. ISA allowance

This is the total amount you can save into one or multiple ISAs each tax year. The current limit is £20,000. Within this, you can only pay £4,000 into one Lifetime ISA. And from April 2027, under rules announced in the Budget, you’ll only be able to save £12,000 into a cash ISA if you’re under 65. These rules could be subject to change before implementation.

Learn more about ISA allowances. 

2. Pension allowances

The annual allowance caps how much you can contribute to your pension each year and receive tax relief on and currently sits at £60,000 or 100% of your earnings - whichever is lower.

The annual allowance may also taper if your income is £200,000 or more. The calculation depends on specific income definitions, so it’s worth checking how the rules apply to your circumstances.  Read about the tapered annual allowance.

If you have no or very low earnings, you can pay in £2,880 and get tax relief on contributions, boosting them to £3,600.

Your allowance may drop to £10,000 if you’ve already taken taxable money from your pension pot (known as the Money Purchase Annual Allowance).

You might also be able to use unused allowance from the previous three tax years, called carry forward, to add more to your pension and still receive tax relief.

Learn more about pension allowances. 

3. Junior account allowances

The current allowance you can save into a cash Junior ISA and a stocks and shares Junior ISA each tax year is £9,000. You can split this between both types of account in any combination as long as you don’t exceed the overall allowance.

And for a Junior SIPP, you can contribute up to £2,880 each tax year with tax relief increasing the total contribution to £3,600. 

4. Inheritance Tax thresholds

There are two key allowances. The nil-rate band - where you can pass on up to £325,000 without paying Inheritance Tax. This threshold has been frozen until April 2030. And the residence nil-rate band, which is an extra £175,000 that may apply if you leave a home (or the

proceeds from a home you’ve sold) to children, stepchildren, adopted or foster children, or grandchildren. This additional allowance tapers for estates worth more than £2 million.

Married couples and civil partners can effectively combine their allowances, meaning that if the family home is left to direct descendants and neither partner has used up their thresholds, they can pass on up to around £1 million free of Inheritance Tax. This is achieved by transferring any unused nil-rate band and residence nil-rate band from the first partner to die, allowing both sets of allowances to be applied to the estate on the second death.

Read more about Inheritance Tax rates and thresholds. 

5. Gifting allowances

There are several gifting allowances that let you pass money on during your lifetime without it counting towards the value of your estate for Inheritance Tax purposes.

The main one is the annual exemption, which lets you give away up to £3,000 each tax year. If you didn’t use last year’s allowance, you can carry it forward for one year, allowing you to give up to £6,000 in total. Alongside this, you can also make small gifts of up to £250 to as many people as you like each tax year, provided you haven’t used another allowance for the same person.

There are also specific allowances for wedding and civil partnership gifts. Parents can give up to £5,000, grandparents up to £2,500, and anyone else up to £1,000, all without these gifts forming part of their estate. These allowances can be used in combination with the annual exemption if you want to give a larger gift.

Another important exemption covers regular gifts made from surplus income. These are gifts you make as part of a pattern, such as contributing monthly to a grandchild’s Junior ISA or paying ongoing school fees. To qualify, the gifts must genuinely come from your income rather than savings and must not affect your normal standard of living. There’s no set limit, but it’s sensible to keep clear records to show that the gifts meet the rules.

Anything you leave to a recognised charity, political party or certain national institutions won’t count towards Inheritance Tax at all - there’s no upper limit. Leave 10% or more of your estate to charity, and the tax rate on the remainder can be reduced too.

And let’s not forget about the seven-year rule. You can gift any amount of assets with no IHT to pay if seven years pass without you dying. If you die within seven years, a reduced rate applies to any amount above your nil-rate band (40% within three years; 32% after three years; 25% after four years; 16% after five years and 8% after six years).

Read more about Gifts and Inheritance Tax. 

6. Capital Gains Tax allowance

This is the total profit you can make from selling assets like shares or property (excluding your main home) before Capital Gains Tax is due. For the current tax year, the allowance is £3,000 for individuals and personal representatives, and £1,500 for most trustees. Your main home is usually exempt. Allowances can change, so it’s worth checking the latest guidance if you’re planning a sale. 

7. Dividend allowance

This is the amount of dividend income you can receive without paying tax. The current dividend allowance is £500. Anything above this is taxed according to your Personal Income Tax band. Scottish Income Tax rates don’t apply to dividend income, which is taxed at standard UK rates. 

8. Personal allowance

This is the amount of income you can earn before paying income tax. It’s currently £12,570 per year. 

9. Personal savings allowance

This is how much you can earn on interest from your savings without paying tax. This depends on what rate of income tax you pay - £1,000 for basic rate taxpayers and £500 for higher rate taxpayers. Additional-rate taxpayers aren’t entitled to a personal savings allowance. Scottish taxpayers follow the same personal savings allowance rules as the rest of the UK. 

10. Marriage allowance

You can transfer £1,260 of your personal allowance (the amount you can earn before paying tax) to your spouse or civil partner if you’re the lower earner. To qualify, the lower earner’s income normally needs to be below £12,570, while the higher earner must be a basic rate taxpayer. If you or your partner were born before 6 April 1935, you might benefit more as a couple by applying for Married Couple’s Allowance instead.

• Read: Taxes: jargon buster
• Read: How much do I need to start investing?
• Read: 5 ways to pay less tax - regardless of the Budget

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Tax treatment depends on individual circumstances and all tax rules may change in the future. Junior ISAs are long term tax-efficient savings accounts for children. Withdrawals will not be possible until the child reaches age 18. A Junior ISA is only available to children under the age of 18 who are resident in the UK. It is not possible to hold both a Junior ISA and a Child Trust Fund (CTF). If your child was born between 1 September 2002 and 2 January 2011 the Government would have automatically opened a CTF on your child’s behalf. If your child holds a CTF they can transfer the investment into a Junior ISA. Please note that Fidelity does not allow for CTF transfers into a Junior ISA. Parents or guardians can open the Junior ISA and manage the account but the money belongs to the child and the investment is locked away until the child reaches 18 years old. Eligibility to invest into an ISA and the value of tax savings depends on personal circumstances and all tax rules may change. This information is based on our understanding of the proposed LISA rules which may be subject to change. Withdrawals from a pension product will not be possible until you reach age 55 (57 from 2028). This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.