The 2026/27 tax year. Your allowances and their long-term impact

For many of our clients, the next decade is pivotal. Retirement timing, liquidity events, succession planning and intergenerational wealth transfer all begin to converge. Allowances are not just annual limits. In reality, they are tools that support your longer-term life goals and ambitions.

Each of the allowances below plays a distinct role in your wider wealth strategy. On their own, they may seem incremental. Used consistently, they can strengthen your long-term position and expand your options over time.

The products referred to below are investments and their value can fall as well as rise, meaning you could get back less than you originally contribute. Tax treatment depends on individual circumstances and is subject to change.

The annual allowance is the maximum amount you can contribute to a pension each tax year while still benefiting from tax relief. For 2026/27, this is up to £60,000 or 100% of your relevant UK earnings (whichever amount is lower). It may also be possible to carry forward any unused allowance amounts from the previous three tax years (subject to eligibility).

For higher earners, the allowance may be reduced under the tapered annual allowance rules. Broadly, where adjusted income exceeds £260,000, the £60,000 allowance is reduced by £1 for every £2 of income above this level, down to a minimum of £10,000. Employer contributions are included when assessing these thresholds.

Pension benefits cannot normally be accessed until age 55 and this is rising to 57 from April 2028.

A core element of long-term portfolio structuring. ISAs provide tax-free growth and withdrawals, making them a valuable complement to pensions and other investment portfolios, particularly where flexibility, sequencing of income and estate considerations are part of the wider strategy.

A structured way to build capital for a child that becomes theirs at age 18. Contributions are locked in until adulthood, making this less about short-term funding and more about creating a future nest egg, whether for higher education, property or long-term financial security.

This is the amount of dividend income that can be received each tax year before dividend tax becomes payable. At £500, it now offers only a limited shelter from tax. If you hold substantial taxable portfolios or business interests, dividend tax exposure requires active management.

The amount of capital gains you can realise each tax year before CGT is payable. With exemptions reduced, portfolio structuring and gain realisation strategies are increasingly important.

You can give away up to £3,000 each tax year free of IHT, with unused allowance carried forward for one year. Regular gifts out of surplus income may also fall outside your estate, subject to conditions.
Used consistently over time, gifting allowances can gradually reduce the value of your taxable estate.

Individually, these figures may seem modest relative to your overall wealth, but used collectively and consistently, they could materially influence net outcomes for generations to come.

Looking ahead is equally important, particularly when legislative changes begin to affect how wealth transitions between families and the legacy you will leave behind.

From 6 April 2027, two structural changes are expected to alter long-term planning conversations, subject to the relevant legislation being enacted as proposed.

Most unused pension funds and some death benefits are expected to be included within the value of your estate for inheritance tax purposes.

Historically, pension assets could often be passed on outside your estate for IHT, making them an effective intergenerational planning tool. Bringing them into scope changes how retirement wealth interacts with legacy planning, particularly for people who may not expect to draw fully on their pension during their lifetime.

For people under age 65, the annual cash ISA subscription limit will be reduced to £12,000. If you fall within this age bracket, to fully use the £20,000 overall ISA allowance, the remaining £8,000 must go into other ISA types (for example, stocks and shares) if you want to maximise your tax-free allowance.

For people aged 65 and over on 6 April 2027, the £20,000 cash ISA allowance stays at £20,000.

Allowances are reset each year. Your ambitions are not.

Whether you are approaching retirement, planning a business exit, supporting family members or thinking about your legacy, the decisions made in the next tax year and beyond will influence how much control and confidence you have in the future.

At Evelyn Partners, allowances are not treated as isolated numbers. Instead, they are integrated into your long-term wealth plan, aligning financial planning, investment management, tax structuring and estate planning around your personal objectives.

To find out more, book an appointment or speak to your usual Evelyn Partners contact.