In this section: Every tax
Cut allowances: capital gains, dividends and savings
Last updated . Figures refresh every night. How each figure is worked out.
Two allowances on investment income have been cut sharply and one has been frozen. The capital gains tax allowance is £3,000, down from £12,300 in 2020. The dividend allowance is £500, down from £5,000 when it began in 2016, and dividend tax rates rose to 10.75% and 35.75% in April 2026. The personal savings allowance has been £1,000 for basic-rate taxpayers since 2016, unchanged in cash.
Figure as of 22 September 2026. Source: HM Revenue and Customs, HM Revenue and Customs.
Key figures
- £3,000Capital gains tax allowance Down from £12,300 in 2020
- £500Dividend allowance Down from £5,000 in 2016
- £1,000Personal savings allowance, basic-rate taxpayer Unchanged in cash since 2016
- 10.75%Tax on dividends above the allowance, basic-rate taxpayer Since April 2026
Source: HM Revenue and Customs.
What are the allowances now?
In force since 6 April 2024. Source: HM Revenue and Customs. Checked by hand 22 September 2026.
In force since 6 April 2024. Source: HM Revenue and Customs. Checked by hand 22 September 2026.
In force since 6 April 2016. Source: HM Revenue and Customs. Checked by hand 22 September 2026.
How did they get here?
The numbers behind this chart
| From | Capital gains tax allowance | Dividend allowance | Personal savings allowance (basic rate) |
|---|---|---|---|
2016-04-06Details for 2016-04-06 | — | £5,000 | £1,000 |
| |||
2018-04-06Details for 2018-04-06 | — | £2,000 | £1,000 |
| |||
2020-04-06Details for 2020-04-06 | £12,300 | £2,000 | £1,000 |
| |||
2023-04-06Details for 2023-04-06 | £6,000 | £1,000 | £1,000 |
| |||
2024-04-06Details for 2024-04-06 | £3,000 | £500 | £1,000 |
| |||
2026-09-29Details for 2026-09-29 | £3,000 | £500 | £1,000 |
| |||
Figure as of 22 September 2026. Source: HM Revenue and Customs, HM Revenue and Customs.
| Allowance | First value | Now | Note |
|---|---|---|---|
Capital gains tax annual exempt amountDetails for Capital gains tax annual exempt amount | £12,300 (2020) | £3,000 | The official page goes back to 2021-22. £12,300 applied from 2020-21 to 2022-23. |
| |||
Dividend allowanceDetails for Dividend allowance | £5,000 (2016) | £500 | Introduced at £5,000 in April 2016, when the old dividend tax credit was abolished. |
| |||
Personal savings allowance, basic-rate taxpayerDetails for Personal savings allowance, basic-rate taxpayer | £1,000 (2016) | £1,000 | Not cut, but unchanged in cash since 2016. Additional-rate taxpayers get nothing. |
| |||
Checked 22 September 2026. Source: HM Revenue and Customs. Checked by hand 22 September 2026.
What do the cuts mean in pounds?
| Example | Tax under the original allowance | Tax now |
|---|---|---|
Basic-rate taxpayer with £2,000 of dividendsDetails for Basic-rate taxpayer with £2,000 of dividends | £0 | £161 |
| ||
Higher-rate taxpayer selling shares at a £10,000 gainDetails for Higher-rate taxpayer selling shares at a £10,000 gain | £0 | £1,680 |
| ||
The dividend example compares today's 10.75% basic rate on dividends above £500 with the 8.75% rate that applied from 2022 on dividends above the original £5,000 allowance. The gains example uses today's 24% higher rate for both, so it isolates the allowance cut. Money held in an ISA or a pension is not affected by either.
Why were they cut?
Governments have given two reasons. The allowances cost more than intended, with the dividend allowance in particular used by company owners to take income more cheaply than salary. And cutting them raises money from people with savings and investments rather than from earnings. The savings allowance, in contrast, has not been cut but has been left unchanged since 2016, so as interest rates rose after 2022 far more savers began to pay tax on interest.
From April 2027 the rates on savings and property income also rise by two points, to 22%, 42% and 47%, under the Finance Act 2026.
Income tax, capital gains tax, inheritance tax, VAT and duties
Consolidated Fund (general Treasury funds) the Consolidated Fund, with no earmark. National Insurance goes to the National Insurance Fund.
Exchequer and Audit Departments Act 1921, s2 (HMRC Trust Statement)
HMRC accounts for taxes, fines and penalties in its Trust Statement, prepared under section 2 of the Exchequer and Audit Departments Act 1921, and pays net receipts into the Consolidated Fund. National Insurance goes to the National Insurance Fund.
Legal position as of 22 September 2026. Source: legislation.gov.uk. Checked by hand 22 September 2026.
Were the cuts fair?
The case for
- Income from wealth was taxed more lightly than income from work; this narrows the gap.
- The dividend allowance was widely used to cut the tax on company owners’ pay.
- ISAs and pensions still shelter most ordinary savers entirely.
The case against
- Small savers and investors now fill in tax returns for modest sums.
- The gains allowance is not indexed, so inflation alone produces taxable gains.
- Repeated changes make long-term saving harder to plan.
Common questions
- What is the capital gains tax allowance?
- £3,000 a year for 2026-27, down from £12,300 in 2022-23.
- What is the dividend allowance?
- £500 a year, down from £5,000 when it was introduced in April 2016.
Sources for this page
| Source | Publisher | Figures as of | Updated | Licence |
|---|---|---|---|---|
| Capital gains tax annual exempt amount | HM Revenue and Customs | 22 September 2026 | annual | Open Government Licence v3.0 |
| Dividend allowance | HM Revenue and Customs | 22 September 2026 | annual | Open Government Licence v3.0 |
| Personal savings allowance, basic-rate taxpayer | HM Revenue and Customs | 22 September 2026 | annual | Open Government Licence v3.0 |
| legislation.gov.uk and official guidance, provision by provision | legislation.gov.uk | 22 September 2026 | annual | Open Government Licence v3.0 (legislation.gov.uk) |
Each source's figures are used under the licence shown. Our own words, analysis, charts and derived calculations are ours, under CC BY 4.0.