Just like that, it’s the new tax year, which comes with updated tax allowances for 2025/26.

If you want to be tax-efficient personally and in your business, it’s about utilising the tax allowances wisely.

Here’s a jargon-free summary of the tax allowances available to you in the 2025/26 tax year:

💰 Capital Gains Tax Allowance – £3,000

If you sell something that’s increased in value—like shares, a second property, or even crypto—you might need to pay Capital Gains Tax.

The good news is the first £3,000 of profit you make is tax-free. Anything above that gets taxed, depending on how much you earn.

HMRC guidance on the CGT allowance

📈 Dividend Allowance – £500

If you take dividends from a limited company, the first £500 you receive is tax-free. After that, the amount you pay in tax depends on your income band.

It’s not a huge allowance these days, but still worth making the most of—especially if dividends form part of your income.

HMRC guidance on the dividend allowance

🧾 Employment Allowance – £10,500

If you’re an employer paying Class 1 National Insurance, you can now reduce your annual liability by up to £10,500. This is a significant increase from the previous £5,000 allowance.​

There are specific criteria needed to claim the employment allowance; for example single, director only companies aren’t eligible for the employment allowance.

HMRC guidance on the employment allowance

🏦 ISA Allowance – £20,000

You can still invest up to £20,000 tax-free across different types of ISAs: Cash ISAs, Stocks & Shares ISAs, Innovative Finance ISAs, and Lifetime ISAs.

You can now open more than one ISA of the same type in the same tax year, giving you a bit more flexibility.

Lifetime ISAs still have a £4,000 limit within that total and are great if you’re saving for a first home or retirement (plus, there’s a 25% bonus from the government).

HMRC guidance on ISAs

HMRC guidance on lifetime ISAs

👶 Junior ISA Allowance – £9,000

You can put up to £9,000 into a Junior ISA for your child this year. The money grows tax-free, and they get access to it when they turn 18.

A great way to give them a financial head start—whether for uni, travel, or their first car.

HMRC guidance on junior ISAs

🧓 Pension Annual Allowance – Up to £60,000

You can put up to £60,000 into your pension and still get tax relief. That’s the headline figure—but for high earners or if you’ve accessed your pension pot before, this allowance might be as low as £10,000.

Still, for most people, pensions are one of the most tax-efficient ways to save for the future.

HMRC guidance on the pension annual allowance

💷 Personal Allowance – £12,570

This is the amount of income you can earn before you start paying income tax. It remains £12,570 this year.

If you earn more than this, that’s when you start paying tax on anything above it, depending on your band.

Your personal allowance reduces by £1 for every £2 that your adjusted net income goes over £100,000.

HMRC guidance on income tax rates and the personal allowance

💵 Personal Savings Allowance – £1,000 or £500

This one depends on your income level:

  • If you’re a basic-rate taxpayer, you can earn £1,000 in savings interest tax-free.
  • If you’re on the higher rate, it’s £500.
  • Sadly additional rate taxpayers, get no allowance.

With interest rates still higher than they’ve been in years, it’s worth knowing if your savings might tip over these thresholds.

HMRC guidance on the personal savings allowance

A quick note on your tax allowances to finish

This is general information and not personal advice. If you’re unsure what’s right for your situation, it’s best to speak to an accountant or financial advisor. Tax rules can change, and what works best depends on your individual circumstances.

If you’re based in Lichfield and want to make sure you’re using your tax allowances wisely, feel free to book a discovery call—I’d be happy to help.