What is the Personal Savings Allowance for 2026/27?

£1,000 for basic-rate taxpayers, £500 for higher-rate, and nil for additional-rate taxpayers. Interest above this is taxed at your marginal rate.

What are the dividend tax rates for 2026/27?

10.75% basic rate, 35.75% higher rate and 39.35% additional rate, after basic and higher rates rose by two points in April 2026.

How much is the dividend allowance?

£500 for 2026/27. The first £500 of dividends is tax-free; the rest is taxed at the dividend rates.

Are ISAs really tax-free?

Yes. Interest, dividends and capital gains within an ISA are free of Income Tax and Capital Gains Tax.

How much can I pay into an ISA?

Up to £20,000 across all ISA types in 2026/27. Allowances are individual, so a couple can shelter £40,000.

Can I still put £20,000 in a cash ISA?

For 2026/27, yes. From April 2027, under-65s are limited to £12,000 in cash ISAs; over-65s keep the full £20,000.

What is a Lifetime ISA?

An ISA for a first home or retirement, allowing up to £4,000/year (within the £20,000 limit) with a 25% government bonus. Non-qualifying withdrawals incur a penalty.

Do directors pay National Insurance on dividends?

No. Dividends carry no NICs, which is why owner-managers often take dividends — though the April 2026 rate rise narrowed the advantage.

What is the starting rate for savings?

Up to £5,000 of extra tax-free interest if your non-savings income is below £17,570, reducing as other income rises.

Do I need to declare savings interest?

Only if it exceeds your Personal Savings Allowance. Banks report interest to HMRC, who may adjust your code or ask you to file.

Can I have more than one ISA?

Yes. You can pay into multiple ISAs of different types in a year, as long as total contributions stay within £20,000.

What happens if I withdraw from a Lifetime ISA early?

Withdrawals other than for a first home or after age 60 face a 25% government charge, which can return less than you put in.

Is offshore interest taxable?

Yes. UK residents are taxed on worldwide income, so foreign interest and dividends must be reported, with extra rules for larger offshore accounts.

What is a Property Income Distribution (PID)?

Income from REITs paid after 20% withholding tax and taxed as property income rather than as a dividend.

How do I report dividends over the allowance?

Enter them in the UK dividends box on the SA100 Self Assessment return by 31 January, or let HMRC collect via your tax code if modest.

Can spouses share savings allowances?

No, each has their own PSA and dividend allowance. But you can move assets to a lower-rate spouse so income is taxed less.

What is an innovative finance ISA?

An ISA wrapper for peer-to-peer lending, where interest is earned tax-free within the allowance.

Do children pay tax on savings?

Children have their own allowances, but interest over £100/year on a parent’s gift is taxed on the parent to prevent income shifting.

What is the Junior ISA limit?

£9,000 for 2026/27, across cash and stocks & shares Junior ISAs combined.

Are dividends from my own company taxed the same way?

Yes. Director dividends use the same £500 allowance and 10.75%/35.75%/39.35% rates as any other UK dividends.

How is the dividend tax rate decided?

Dividends stack on top of your other income, so the rate depends on which band the dividends fall into after salary and other income.

Can I move shares into an ISA to save tax?

Yes — a "Bed & ISA" sells shares and rebuys them inside an ISA. The sale may trigger CGT, but future growth and income become tax-free.

Do I pay tax on interest within a pension?

No. Like ISAs, pensions shelter interest, dividends and gains from tax while invested.

What changes are coming for savings and property income?

From April 2027, separate higher rates of 22%/42%/47% are expected to apply to savings and property income — two points above the main Income Tax rates.

Where can I find official guidance on investment tax?

See gov.uk/tax-on-dividends, gov.uk/apply-tax-free-interest-on-savings and gov.uk/individual-savings-accounts.

Savings &; Investment Tax

Savings & Investment Tax
explained.

Tax on savings interest and dividends depends on your band. The Personal Savings Allowance, the £500 dividend allowance, the higher dividend rates from April 2026, ISAs and the 2027 cash ISA cap — with worked examples.

✓ Verified 2026/27✓ HMRC sources✓ Free calculators

Tax on savings interest

The Personal Savings Allowance (PSA) gives basic-rate taxpayers £1,000 of tax-free interest, higher-rate £500, and additional-rate nil. A starting rate for savings can add up to £5,000 more tax-free interest if your other income is low (below £17,570), tapering as income rises. Interest above your allowances is taxed at your marginal rate.

Dividend tax — higher from April 2026

Dividends have a £500 allowance. Rates rose from April 2026:

Band	From April 2026	Previously
Basic rate	10.75%	8.75%
Higher rate	35.75%	33.75%
Additional rate	39.35%	39.35%

Worked example

Higher-rate taxpayer with £5,000 of dividends

Dividends£5,000

Less dividend allowance−£500

Taxable dividends£4,500

Dividend tax at 35.75%£1,608.75

Dividend tax due£1,609

ISAs and the 2027 cash ISA cap

ISAs shelter interest, dividends and gains entirely from tax. The annual allowance is £20,000, split across cash, stocks & shares, innovative finance and Lifetime ISAs as you choose.

📌 Cash ISA change from April 2027

2026/27 is the last year you can put the full £20,000 into a cash ISA. From April 2027, under-65s are capped at £12,000 in cash ISAs (the remaining £8,000 must go to stocks & shares or innovative finance); those 65 and over keep the full £20,000 cash allowance. Existing cash ISA balances are unaffected.

Lifetime ISA — up to £4,000/year with a 25% government bonus; penalties apply for non-qualifying withdrawals.
Junior ISA — £9,000/year for under-18s.
ISA allowances are individual and can’t be transferred between spouses.

How to report investment income

If interest or dividends exceed your allowances, report through Self Assessment: the SA100 main return includes boxes for UK interest (untaxed and taxed) and UK dividends. Where amounts are modest and you’re employed, HMRC may instead adjust your tax code to collect the tax.

Director-shareholders

Owner-managers often combine a small salary with dividends. With the April 2026 rate rise, recheck the split using our Director Salary calculator. Dividends still avoid National Insurance, so they usually remain efficient — but the margin has narrowed.

🔗 Official sources

Tax on dividends: gov.uk/tax-on-dividends. Tax on savings interest: gov.uk/apply-tax-free-interest-on-savings. ISAs: gov.uk/individual-savings-accounts.

2026/27 TAX YEAR IS HERE MTD FOR INCOME TAX NOW MANDATORY FOR LANDLORDS & SELF-EMPLOYED OVER £50K DIVIDEND TAX RATES INCREASED TO 10.75% & 35.75% — OPTIMISE YOUR PAYOUTS ADVANCED CALCULATORS FOR PROPERTY, CRYPTO, AND INHERITANCE TAX HERE

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Savings & Investment Tax
explained.

Savings & Investment Tax

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