UK adults can utilise a range of tax-free allowances to protect savings and investments from tax in the 2026/27 tax year. These allowances include Individual Savings Accounts (ISAs), personal savings allowance, and pension contributions.
The annual ISA allowance permits individuals to invest up to £20,000, shielding interest or investment returns from tax. This allowance operates on a "use it or lose it" basis each tax year.
For savings not held in an ISA, a personal savings allowance (PSA) allows basic rate taxpayers to earn up to £1,000 in interest tax-free, while higher rate taxpayers can earn £500. Additional rate taxpayers do not have a PSA. Additionally, income, including savings interest, within the £12,570 personal allowance is tax-free.
Most individuals can contribute up to £60,000 to their pension annually, receiving government tax relief. Unused allowances from the previous three tax years can also be carried forward. Furthermore, UK adults have a tax-free Capital Gains Tax (CGT) allowance of £3,000 on profits from selling assets, such as stocks and shares in a General Investment Account (GIA).