Every 6 April, HM Revenue & Customs resets a whole set of valuable allowances and exemptions – and most of them work on a strict “use it or lose it” basis, with no carrying forward into the following year. It’s easy to let this pass you by if your attention is elsewhere for months at a time. Reviewing what’s available to you at more than one point in the tax year, rather than scrambling in the final weeks before the 5 April deadline, tends to give you far more scope to actually act on it.
We help clients across Poole, Bournemouth and the wider Dorset area work out which of these allowances genuinely apply to their circumstances, since not every one will be relevant to every person, and using one well sometimes depends on using another alongside it. Here are seven of the allowances we’re asked about most.
1. ISA allowance – £20,000
You can shelter up to £20,000 across all your ISAs combined in the 2026/27 tax year – split however you like between cash, stocks and shares, innovative finance and Lifetime ISAs (subject to the Lifetime ISA’s own £4,000 cap within that total). Anything you don’t use by 5 April simply disappears rather than rolling forward. It’s also worth knowing that the rules around Cash ISAs are due to change from April 2027, when the annual limit for under-65s is set to reduce to £12,000 – so if a larger Cash ISA contribution is part of your plans, doing it sooner rather than later may be worth considering.
2. Junior ISA allowance – £9,000
If you’re saving on behalf of a child under 18, a Junior ISA lets you put away up to £9,000 this tax year, again split between cash and stocks and shares as you choose. The money belongs to the child once they turn 18, at which point it automatically becomes a standard adult ISA in their own name – worth bearing in mind if you’d rather retain some influence over how it’s eventually used.
3. Dividend Allowance – £500
The first £500 of dividend income you receive outside an ISA or pension is tax-free each year. Beyond that, dividend tax rates have actually risen for 2026/27: the basic rate has increased from 8.75% to 10.75%, and the higher rate from 33.75% to 35.75% (the additional rate stays at 39.35%). If you hold dividend-paying investments outside a tax wrapper, that increase makes it more worthwhile than ever to check whether moving them into an ISA or pension – where dividends aren’t taxed at all – could work in your favour.
4. Capital Gains Tax Annual Exempt Amount – £3,000
Each individual has a £3,000 Annual Exempt Amount for capital gains, below which no Capital Gains Tax is due. Above that, gains are taxed at 18% within your basic-rate band, or 24% above it. Because this allowance resets every year rather than accumulating, some people realise smaller gains regularly – sometimes reinvesting the proceeds inside an ISA, an approach often called “Bed and ISA” – rather than making one large disposal that pushes well past the threshold in a single year.
5. Marriage Allowance – £1,260
If one of you earns below the £12,570 Personal Allowance and the other is a basic-rate taxpayer, the lower earner can transfer £1,260 of their unused Personal Allowance to their spouse or civil partner, reducing the higher earner’s tax bill by up to £252 a year. It’s also possible to backdate a claim by up to four tax years if you were eligible but didn’t claim at the time, which is easy to miss and worth checking.
6. Pension Annual Allowance – £60,000
You can currently contribute up to £60,000 a year into your pension (or 100% of your earnings if lower) and still receive tax relief, tapering down to a minimum of £10,000 if your adjusted income is above £260,000. If you’ve already accessed your pension flexibly, a lower £10,000 Money Purchase Annual Allowance applies instead. Unused allowance from the previous three tax years can generally be carried forward, so it’s worth checking what headroom you might still have before assuming you’ve missed your chance. It’s also worth knowing that from April 2027, most unused pension funds and certain death benefits are due to become part of your estate for Inheritance Tax purposes for the first time – a change that makes it worth reviewing your pension nominations and overall funding strategy sooner rather than later.
7. Inheritance Tax annual exemption – £3,000
You can gift up to £3,000 each tax year completely free of Inheritance Tax, and if you didn’t use last year’s exemption, you can carry it forward for one year only, giving you up to £6,000 to gift this year. Smaller gifts of up to £250 per person are also exempt, provided you haven’t used another exemption on the same person, and there are separate allowances for wedding or civil partnership gifts. Used consistently, small annual gifts like these can make a genuine dent in a future Inheritance Tax bill over time, particularly alongside your wider gifting and estate planning.
Making these work together
These allowances rarely work best in isolation – using your ISA allowance alongside your Capital Gains Tax exemption, or your pension contributions alongside your Inheritance Tax planning, often achieves more than tackling each one separately. Since every one of these resets on 6 April regardless of whether you’ve used it, it’s something worth revisiting at more than one point in the year rather than only when the deadline is looming.
Let’s talk through what applies to you
As financial planners based in Poole, we work with clients across Bournemouth and the wider Dorset area to work out which of these allowances are actually relevant to their circumstances, and how to use them well. If you’d like to explore your options, we’re always happy to have a no-obligation conversation.
Get in touch to find out how we can help you make the most of what you’ve worked hard to build.
This article is for general information only and does not constitute advice. All information is correct at the time of writing (September 2026) and is subject to change in the future. All contents are based on our understanding of HMRC legislation and guidance, which can change.
The Financial Conduct Authority does not regulate tax planning, Inheritance Tax planning or estate planning.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028); the fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.