Master UK investment taxes with 2025 rates, allowances, and strategies to legally minimize your tax bill and keep more of your returns.
CGT Allowance
£3,000
Annual tax-free capital gains (down from £12,300)
Dividend Allowance
£500
Tax-free dividend income per year (down from £2,000)
ISA Allowance
£20,000
Invest tax-free - no CGT or dividend tax
Pension Allowance
£60,000
Annual pension contribution limit with tax relief
Tax is your biggest investment cost - more than fees, more than inflation. A higher-rate taxpayer could lose 33.75% of dividends and 20% of capital gains to tax. Over 30 years, that's the difference between £200,000 and £300,000.
💡 Real Example:
Sarah invests £10,000/year for 20 years at 7% returns:
• In an ISA: £436,000 (tax-free)
• In a normal account (40% taxpayer): £380,000
• Tax saved with ISA: £56,000+ 💰
Tax on profit when you sell investments. £3,000 allowance, then 10% (basic) or 20% (higher) on gains above.
Tax on dividend income from stocks. £500 allowance, then 8.75% (basic), 33.75% (higher), 39.35% (additional).
Tax on interest from bonds/cash. Personal Savings Allowance: £1,000 (basic), £500 (higher), £0 (additional).
Annual Allowance
£3,000
Per tax year (was £12,300)
Basic Rate
10%
On gains above £3k
Higher/Additional Rate
20%
On gains above £3k
✅ CGT-Free:
❌ CGT Applies:
Allowance
£500
Was £2,000
Basic Rate
8.75%
Higher Rate
33.75%
Additional Rate
39.35%
💡 Example:
Higher-rate taxpayer receives £2,000 dividends:
• First £500: Tax-free
• Remaining £1,500: Taxed at 33.75% = £506 tax
• In an ISA: £0 tax ✅
Basic Rate
£1,000
Tax-free interest
Higher Rate
£500
Tax-free interest
Additional Rate
£0
All interest taxed
Significant tax savings available with planning
| Feature | ISA | General Account | Pension |
|---|---|---|---|
| Contribution Tax Relief | None | None | 20-45% |
| Tax on Growth | None | CGT 10-20% | None |
| Tax on Dividends | None | 8.75-39.35% | None |
| Tax on Withdrawal | None | None | 0-45% (25% tax-free) |
| Annual Limit | £20,000 | Unlimited | £60,000 |
| Access Age | Anytime | Anytime | 55/57+ |
| Best For | Flexibility | Large portfolios | Retirement |
Calculate how much tax you'll pay on investment gains
Total Tax Payable
£2,306
Use your full £20k ISA allowance before investing in general accounts. All growth and income is completely tax-free. This is the #1 priority for UK investors.
Sell investments in general account (using £3k CGT allowance), immediately rebuy in ISA. Move assets tax-efficiently into tax-free wrapper.
Sell losing investments before tax year-end to offset gains. Losses can be carried forward indefinitely. Reduce your CGT bill strategically.
Married couples get 2x allowances: £6k CGT, £1k dividends. Transfer assets between spouses (no CGT) to use both allowances.
Spread large gains across tax years. Sell half in March, half in April. Double your £3k CGT allowance by using two tax years.
If you earn £50k+, pension contributions beat ISAs. Get 40-45% tax relief upfront vs 0% for ISAs. Massive difference for higher earners.
Leaving ISA allowance unused is the biggest mistake. £20k allowance expires on 5 April - use it or lose it forever. Over 20 years, this could cost £50k+ in tax.
Every crypto trade (even BTC→ETH) is a CGT event. Many investors don't report this. HMRC is cracking down with data from exchanges.
Higher/additional rate taxpayers must claim extra pension tax relief via self-assessment. Many forget - losing thousands in free money.
Selling £20k of shares when you only need £5k. Use allowances strategically - sell £3k gains each year rather than £30k in one year.
HMRC requires proof of purchase price, costs, dates. Without records, you pay maximum CGT. Keep statements for at least 6 years.
Married couples can transfer assets tax-free. If one spouse has unused allowances, use them! Doubles your tax-free thresholds.
CGT over £3,000
Must report via self-assessment by 31 Jan
Total proceeds over £12,000
Even if gains are under £3k, report if you sold £12k+
Crypto trades
All crypto disposals, even crypto-to-crypto
💡 Pro Tips:
What is the UK Capital Gains Tax allowance for 2025/26?
Track your capital gains, dividends, and tax efficiency with TrioWealth