I'm going to talk about tax. I know, I'm sorry. But there are changes coming that will affect almost everyone who invests outside a tax wrapper, and not enough people seem to know about them. The 2026 Spring Statement itself was quiet — no new tax rises announced. But the Autumn 2025 Budget changes are still working their way through the system, and several of them bite from April 2026. Here's what's changing, in plain English, and what I'm personally doing about each one. This is not advice — it's what I'm doing with my own finances.
First, dividend tax. From April 2026, the tax rate on dividend income above the £500 dividend allowance rose from 8.75% to 10.75% for basic-rate taxpayers, and from 33.75% to 35.75% for higher-rate taxpayers. If you hold funds or individual shares outside an ISA or SIPP and they pay dividends, this affects you. If you hold everything inside an ISA or SIPP, it doesn't — dividends inside tax wrappers remain tax-free. That last sentence is doing a lot of work.
The practical implication for me is straightforward: I try very hard to hold anything that pays meaningful dividends inside an ISA or SIPP. If I run out of allowance, so be it — I'll pay the tax. But using the allowance — the full £20,000 ISA allowance and whatever pension allowance applies — is my first line of defence against dividend tax. What you do depends on your circumstances.
Second, capital gains tax. The CGT annual exempt amount is now just £3,000 — down from £12,300 a few years ago. That means if you sell shares or funds held outside a tax wrapper and make more than £3,000 in profit in a single tax year, you're paying CGT. For basic-rate taxpayers the rate is 10% (18% on residential property). For higher-rate taxpayers it's 20% (24% on property). And from April 2026, the Business Asset Disposal Relief rate increased from 14% to 18% — relevant if you're selling a business or certain types of shares.
Again, the ISA and SIPP are the defence here. Capital gains inside a tax wrapper are tax-free. Full stop. If you're buying and selling individual shares outside a wrapper, you need to be tracking your gains carefully because the £3,000 allowance can be used up surprisingly quickly. I learned this the hard way — sold some shares I'd held for years, assumed the gain was small, and got an unwelcome surprise when I actually calculated it.
Third — and this is the one that will affect the most people, potentially — the cash ISA cap arrives in April 2027. From 6 April 2027, anyone under 65 will be limited to £12,000 a year in new cash ISA subscriptions. The remaining £8,000 of the £20,000 allowance must go into a non-cash ISA — typically a Stocks and Shares ISA. The 2026/27 tax year, which we're in right now, is the last year where under-65s can put the entire £20,000 into cash if they want to.
I think about this change less as a restriction and more as a nudge. The government is gently pushing people toward investment ISAs because cash ISAs, while safe, offer returns that often don't outpace inflation over the long term. But that's a personal view — cash ISAs are entirely appropriate for many people, especially those with shorter time horizons or lower risk tolerance. The point is: if you're someone who relies heavily on cash ISAs and you're under 65, you have one more year of the full allowance before the cap bites. Plan accordingly.
There are a few other changes worth knowing about. Savings and rental income tax rates are set to rise by 2% from April 2027. Making Tax Digital for Income Tax becomes mandatory for sole traders and landlords with income over £50,000 from April 2026. Inheritance tax rules around business property relief are being tightened — if you hold AIM shares or certain business assets with IHT planning in mind, you need professional advice on this one, not a blog post.
What am I actually doing about all this? A few simple things. I'm using my full ISA allowance every year — £20,000 into a Stocks and Shares ISA, invested in broad ETFs. I'm maximising my pension contributions where possible, because pension tax relief at my marginal rate is valuable and the investments grow tax-free inside the wrapper. I hold very little in taxable accounts — almost everything is wrapped. When I do sell from a taxable account, I track the gain and stay aware of the £3,000 CGT allowance.
I'm also making sure I'm not overcomplicating things. Tax efficiency matters, but it's not the main game. The main game is: earn, save, invest, wait. A tax-inefficient investment that grows is better than a tax-efficient investment that doesn't exist because you were paralysed by optimisation. Use the wrappers available to you — ISA, SIPP, workplace pension — and don't let the tax tail wag the investment dog.
The most important thing is to use the allowances you have. The ISA allowance expires every 5 April and doesn't roll over. The pension annual allowance is £60,000 or 100% of your earnings (whichever is lower). The dividend allowance is £500. The CGT allowance is £3,000. These are use-it-or-lose-it allowances. Every year you don't use them is a year you've permanently lost the opportunity.
Tax rules change. Allowances come and go. But the principle of using tax-advantaged accounts to their maximum — whatever that maximum is at the time — has been sound for decades and I expect it will remain sound. That's what I do. Whether it's right for you depends on your circumstances, your goals, and your tax position. When in doubt, speak to an accountant or financial adviser — I'm neither of those things.
For educational purposes only. Nothing here is financial advice or tax advice. Tax rules are complex, subject to change, and depend on individual circumstances. ISA, SIPP, and pension rules can change. Always speak to a qualified professional for advice tailored to your situation.