UK tax-free allowances 2026/27: how they stack
Every UK tax-free allowance for 2026/27: Personal Allowance, savings, dividend, CGT, ISA, trading, property, IHT and pension, and how they combine.
The UK tax-free allowances for 2026/27 in one table, with the income each one covers, how it tapers and the statute it comes from. Each allowance applies to its own kind of income, so they do not add up to a single tax-free total; the FAQ shows how they combine in two worked examples. Scottish Income Tax bands differ, so the band-based examples are for England, Wales and Northern Ireland.
2026/27 tax-free allowances
| Allowance | Amount | Applies to | Taper or limits | Statute |
|---|---|---|---|---|
| Personal Allowance | £12,570 | All income | Reduced by £1 for every £2 of adjusted net income over £100,000; nil at £125,140 | ITA 2007 s.35 |
| Starting rate for savings | £5,000 | Savings income, at 0% | Reduced £1 for £1 by non-savings income above the Personal Allowance; nil once that income reaches £17,570 | ITA 2007 s.12 |
| Personal Savings Allowance | £1,000 | Savings income, at 0% | £1,000 basic rate, £500 higher rate, £0 additional rate | ITA 2007 ss.12A-12B |
| Dividend Allowance | £500 | Dividends, at 0% | Same for every taxpayer, but still uses band space | ITA 2007 s.13A |
| CGT annual exempt amount | £3,000 | Net chargeable gains | Unused amount cannot be carried forward | TCGA 1992 s.1K |
| ISA allowance | £20,000 | Subscriptions to all ISA types | Unused allowance is lost at 5 April | ISA Regulations 1998 (SI 1998/1870) |
| Lifetime ISA | £4,000 | Part of the ISA allowance; open at 18 to 39 | 25% government bonus, up to £1,000 a year | Savings (Government Contributions) Act 2017 |
| Junior ISA | £9,000 | Per child under 18, separate from the adult allowance | - | ISA Regulations 1998 (SI 1998/1870) |
| Marriage Allowance transfer | £1,260 | Lower earner to a basic-rate spouse or civil partner | Worth up to £252 a year | ITA 2007 ss.55A-55E |
| Trading allowance | £1,000 | Gross trading or miscellaneous income | Full relief at or below the allowance; above it, deduct the allowance or actual expenses | ITTOIA 2005 Part 6A Ch 1 (s.783A) |
| Property allowance | £1,000 | Gross property income | Full relief at or below the allowance; above it, deduct the allowance or actual expenses | ITTOIA 2005 Part 6A Ch 2 (s.783B) |
| Rent a Room | £7,500 | Furnished accommodation in your own home | Halved if the income is shared with someone else | ITTOIA 2005 s.789 |
| IHT nil-rate band | £325,000 | Estate on death and chargeable lifetime transfers | Unused band transfers to a surviving spouse or civil partner (s.8A) | IHTA 1984 s.7 and Sch 1 |
| IHT residence nil-rate band | £175,000 | A home left to direct descendants | Reduced by £1 for every £2 of estate over £2,000,000 | IHTA 1984 ss.8D-8M |
| IHT annual gift exemption | £3,000 | Lifetime gifts each tax year | Unused amount carries forward one year only | IHTA 1984 s.19 |
| Pension annual allowance | £60,000 | Pension savings in all registered schemes | Tapers where threshold income is over £200,000 and adjusted income over £260,000, to £10,000 | FA 2004 s.228 |
| Tax-Free Childcare top-up | £2,000 | Per child per year (£4,000 if disabled) | Not available if either parent's adjusted net income is over £100,000 | Childcare Payments Act 2014 |
Tax-Free Childcare pays 20% of what goes into the account (£2 for every £8 you pay in), up to the cap per child.
Related guides + calculators
Frequently asked questions
Which allowances apply to which kind of income?
The Personal Allowance (£12,570) covers any income. Savings interest then has the starting rate for savings (up to £5,000, only while non-savings income is below £17,570) and the Personal Savings Allowance (£1,000, £500 or £0 by band). Dividends have the £500 Dividend Allowance. Capital gains have the separate £3,000 annual exempt amount. Trading, property and rent-a-room relief cover their own kinds of income. Each allowance is tied to its own income type, so they cannot be added together into one tax-free total.
In what order are allowances used?
Savings and dividend income are treated as the highest part of your income (ITA 2007 s.16): non-savings income such as wages and pensions first, then savings, then dividends. Example: £45,000 salary, £5,000 interest and £10,000 dividends, total £60,000. The Personal Allowance covers £12,570 of salary and the remaining £32,430 is taxed at 20% (£6,486). Total income makes this person a higher-rate taxpayer, so the Personal Savings Allowance is £500; the other £4,500 of interest still fits in the basic band and costs £900. The dividends sit on top: the £500 allowance is taxed at nil but still uses band space, leaving £9,500 at 35.75%: about £3,396.
How do the starting rate for savings and the Personal Savings Allowance combine?
You can have both. Every £1 of non-savings income above the Personal Allowance cuts the £5,000 starting rate by £1. Example: £14,000 of pension and £8,000 of interest. The pension uses the £12,570 Personal Allowance, leaving £1,430 taxed at 20% (£286). That leaves a starting rate of £3,570; with the £1,000 basic-rate Personal Savings Allowance, £3,430 of the interest is taxed at 20%, £686.
Can I use the trading, property and rent-a-room allowances together?
Yes, on different income. The £1,000 trading allowance covers trading or miscellaneous income and the £1,000 property allowance covers property income: at or below the allowance the income is not taxed, and above it you choose between deducting the allowance or your actual expenses. Rent a Room covers up to £7,500 a year from furnished accommodation in your own home (£3,750 if you share the income). The property allowance and Rent a Room cannot both be used on the same income.
How does the Dividend Allowance work?
The first £500 of dividends is taxed at nil. Above it, dividends are taxed at 10.75%, 35.75% or 39.35% in 2026/27; the ordinary and upper rates rose by 2 points from April 2026 (Finance Act 2026 s.4). The allowance has been £500 since 2024/25. GOV.UK says dividend income up to £10,000 can be reported to HMRC through your tax code or a tax return, and above £10,000 you must complete a Self Assessment return.
How do I use the CGT annual exempt amount?
The first £3,000 of net gains each tax year is exempt (TCGA 1992 s.1K), and any unused amount is lost. Gains above it are taxed at 18% within your unused basic rate band and 24% above it, so gains and income share the same band. Spouses and civil partners each have their own exempt amount, and transfers between them are at no gain and no loss (TCGA 1992 s.58). Losses are set against gains of the same year before the exempt amount, and unused losses can be carried forward if claimed.
What is the ISA allowance and how can it be split?
£20,000 in 2026/27, across cash, stocks and shares, innovative finance and Lifetime ISAs, in one account or several. The Lifetime ISA takes up to £4,000 of it. Junior ISAs have their own £9,000 limit per child. If a spouse or civil partner dies, you can inherit their ISA allowance: an extra amount up to the value of their ISA. From 6 April 2027 the cash ISA limit for savers under 65 falls to £12,000 within the overall limit, per HMRC.
What is Marriage Allowance and how far back can I claim?
The lower earner transfers £1,260 of their Personal Allowance to a spouse or civil partner, cutting the partner's tax by up to £252 a year. The lower earner normally has income below the Personal Allowance, and the partner must pay tax at the basic rate (in Scotland, the starter, basic or intermediate rate). Claims can be backdated to 6 April 2022 for years you were eligible, worth up to £252 for each of those 4 years. If either of you was born before 6 April 1935, Married Couple's Allowance may be worth more. Apply free on GOV.UK.
What happens to allowances above £100,000?
The Personal Allowance falls by £1 for every £2 of adjusted net income over £100,000 and is nil at £125,140, which taxes the band in between at an effective 60% in England, Wales and Northern Ireland. Tax-Free Childcare stops entirely if either parent's adjusted net income goes over £100,000. Pension contributions reduce adjusted net income. See our 60% marginal rate guide.
Which pension allowances apply?
The annual allowance is £60,000, and unused allowance from the previous 3 tax years can be carried forward. It tapers only if threshold income is over £200,000 and adjusted income is over £260,000: £1 for every £2 above, to £10,000. The money purchase annual allowance (£10,000) applies once you flexibly access a pension, for example by taking taxable income from drawdown. Tax-free lump sums are limited by the lump sum allowance (£268,275) and the lump sum and death benefit allowance (£1,073,100). Someone with no earnings can pay in up to £2,880 a year and get tax relief. The State Pension (£241.30 a week full new rate) is taxable income.
Do children get their own allowances?
Yes: a child has their own Personal Allowance and Personal Savings Allowance, and a Junior ISA of up to £9,000 a year. But if a child gets more than £100 of interest in a tax year from money given by a parent, the parent is taxed on all of that interest if it is above the parent's own Personal Savings Allowance. The £100 rule does not apply to money from grandparents, other relatives or friends.
What changes after this tax year?
Finance Act 2026 keeps the Personal Allowance and basic rate limit unchanged to 2030-31 (s.10) and the starting rate for savings at £5,000 for the same period (s.9). For 2027-28 the savings rates rise to 22%, 42% and 47% (s.5). Unused pension funds and death benefits come into the estate for Inheritance Tax for deaths on or after 6 April 2027 (ss.66-71). The cash ISA limit for under-65s falls to £12,000 from 6 April 2027.