Updated 22 April 2026 to reflect enacted legislation. The originally-announced halving of the Dividend Allowance was dropped in favour of a 2pp rise on the Basic and Higher dividend rates; the shares CGT rates equalised with property at 18% / 24% from 30 October 2024. Both changes are reflected below.
1. The Dividend Tax Rise
From 6 April 2026, dividend tax rates on the Basic and Higher bands rose by 2 percentage points. The tax-free Dividend Allowance itself remains at £500 — the halving floated in the Budget run-up was not enacted.
For small business directors and investors receiving dividends outside of an ISA, the headline numbers are now:
- Basic Rate Taxpayers: 10.75% on dividends above the allowance (up from 8.75%).
- Higher Rate Taxpayers: 35.75% (up from 33.75%).
- Additional Rate Taxpayers: 39.35% (unchanged).
For the planning playbook — declaring dividends before year-end, pension contributions as an alternative extraction route, and the knock-on for the optimal salary/dividend split — see our dedicated explainer.
2. The Cash ISA Cap
In a move to encourage investment in UK equities, the Chancellor announced a new "Cash ISA Cap" of £12,000 per year, effective from April 2027.
Currently, you can put your full £20,000 allowance into cash. Under the new rules, you can only put £12,000 of this into a Cash ISA (unless you are over 65).
Strategic Advice: The remaining £8,000 must go into a Stocks & Shares ISA if you want to use your full allowance. This policy pushes savers to become investors.
3. Capital Gains Tax (CGT)
Headline CGT rates were not changed in the Autumn Budget 2025 itself, and the tax-free Annual Exempt Amount remains frozen at £3,000 until at least 2030. However, the shares-and-funds rates were already equalised with residential property at 18% / 24% from 30 October 2024, so the table below reflects the position for disposals in 2026/27:
| Asset Type | Basic Rate | Higher Rate |
|---|---|---|
| Residential Property | 18% | 24% |
| Shares / Funds | 18% | 24% |
Business Asset Disposal Relief (BADR) also stepped up on the same timetable: 10% → 14% from 6 April 2025, then 14% → 18% from 6 April 2026.
Don't just guess. Use our free tool to get precise numbers based on these rules.
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