UK tax rates on capital gains, dividends, and savings interest all rise between 2024 and 2027, while ISA contributions drop to £12,000 in April 2027. Since ISA earnings stay tax-free, they become the smarter place to invest as other accounts get hit harder.
Why do ISAs matter more in 2026/2027? Well, there are 4 changes. I've already mentioned some of them. Let me bring this together now and show you exactly how the landscape, the financial and tax landscape, has changed. There are 4 changes, all moving in the same direction. One, CGT, capital gains tax rate, rose from October 2024. Basic rate tax went— for capital gains, went from 10% to, um, 18%, and for higher rate taxpayer, it went from 20% to 24%. 2, dividend tax rose from April 2026. Basic rate went from 8.75% to 10.75%, and higher rates from 33.75% to 35.75% outside an ISA. Inside an ISA, it's unchanged, it's still zero. Okay, now number 3, saving tax rate is rising from April 2027. So from 20% to 22% for basic rate, from 40% to 42% for higher rates. One year left to shelter those savings. But if you are saving it inside a cash ISA is still zero, no changes. Number 4, cash ISA limit dropping from April 2027 from £20K to £12K except you are above 65. Okay, so these are 4 changes. The ISA has not changed throughout this period, but these 4 changes have happened. Everything outside the ISA has gotten more expensive and more taxed. That is the story of 2026-2027. So the ISAs are becoming more and more important. They were important before, but they are even more important.
