UK Dividend Allowance and CGT Exempt Amount in 2026-27: Bed and ISA for Taxable Accounts

Published 30 October 2026 by Steffan Kharmaaiarvi, founder

For UK clients with money in a general investment account, the allowances that once absorbed most portfolio income are now small. The dividend allowance is £500, the capital gains annual exempt amount is £3,000, and dividend tax rates rose in April 2026. What remains matters less as a saving than as a yearly prompt: each tax year is a chance to move holdings into an ISA without a tax charge. This note sets out the 2026-27 figures, a worked example and the usual mistakes. It is decision support, not tax advice.

The figures for 2026-27

Sources: HMRC, Tax on dividends, HMRC, Capital Gains Tax rates and allowances, Individual Savings Accounts. Dividends within the allowance still count towards the client's income bands. On cash ISAs, HMRC's Tax-free savings newsletter 24 (October 2026) says the £20,000 cash ISA limit is retained from 6 April 2027: the reduction announced at Autumn Budget 2025 will not take effect. The overall £20,000 limit is unchanged.

Bed and ISA

A bed and ISA sells a holding in the general investment account and buys it back inside the client's ISA, often on the same day through the platform. The sale is a disposal for capital gains tax, so the gain realised needs to fit within the £3,000 exempt amount, after any other gains in the year, to be free of tax. The repurchase uses part of the year's £20,000 subscription. The 30-day matching rule that defeats "bed and breakfasting" does not generally catch a repurchase inside an ISA. Dealing costs, spreads and any time out of the market are the price of the move. Spouses and civil partners each have their own allowances and ISA, and transfers between them are generally at no gain and no loss.

A worked example

A higher-rate taxpayer holds £150,000 in a general investment account yielding 2%, with £12,000 of unrealised gains, 8% of the value. They have no other gains this year. Round illustrative figures:

• Dividends: £3,000 a year. Tax: (3,000 − 500) × 35.75% = £893.75.
• Bed and ISA of £20,000: at 8% gain, about £1,600 is realised, within the £3,000 exempt amount. No CGT.
• Effect on dividends: £400 a year of dividends moves inside the ISA, about £143 a year less tax at 35.75% at today's yield.
• Next year: another £20,000 subscription and another £3,000 exempt amount. Left alone, the whole £12,000 gain realised in one later year would cost (12,000 − 3,000) × 24% = £2,160 at today's rates.

The actual gain depends on which holdings are sold and their pooled cost, so the arithmetic is a starting point, not a plan.

Common mistakes

• Treating the allowance as a tax-free band. It sets a 0% rate on £500 of dividends, but those dividends still use up the band.
• Leaving the exempt amount unused. It does not carry forward.
• Forgetting gains elsewhere. A property sale or a gain at another platform uses the same £3,000.
• Forgetting offshore funds. A gain on a fund without UK reporting status is income, so the exempt amount does not help: see UK reporting fund status.
• Forgetting the ISA subscription already used this tax year, including cash ISAs elsewhere.

How Borderfolio for Advisors handles it

For a UK-resident client, the Cross-Border page adds an annual allowances finding:

• Taxable accounts. Accounts without a tax wrapper on file are treated as taxable; ISAs and SIPPs are left out.
• Dividends against the allowance. The tax engine's expected dividends a year in those accounts are compared with the £500 allowance, with the excess shown.
• Gains against the exempt amount. Unrealised gains in taxable accounts are shown against the £3,000 exempt amount and the £20,000 ISA limit.
• A prompt, not a recommendation. The finding says that gains up to the exempt amount could be realised free of CGT, for example when moving holdings into an ISA. Which holdings, if any, is the adviser's judgement. The cross-border findings are listed in the documentation.

Where it stops

• The allowances are per person and shared with income and gains outside the accounts on file.
• Gains use the average cost on file; same-day and 30-day matching, losses brought forward and gains elsewhere are not included.
• ISA subscriptions already made this year are not tracked, no holdings are chosen and no trades are placed.

Frequently asked questions

What is the dividend allowance for 2026-27?

£500. Dividends above it are taxed at 10.75% in the basic rate band, 35.75% in the higher rate band and 39.35% in the additional rate band. Dividends within the allowance still count towards the client's income bands.

What is the CGT annual exempt amount for 2026-27?

£3,000 per person. Gains above it on shares are taxed at 18% or 24% depending on the client's income. An unused exempt amount cannot be carried forward.

Does the 30-day rule stop a bed and ISA?

Generally not. The matching rule for shares bought back within 30 days does not catch shares bought back inside an ISA, so the sale realises the gain or loss in the usual way.

Is the cash ISA limit being cut in April 2027?

No longer. HMRC's Tax-free savings newsletter 24 (October 2026) says the £20,000 cash ISA limit is retained from 6 April 2027 and the reduction announced at Autumn Budget 2025 will not take effect.