New Tax Year Allowances 2022-23

Posted: 12th May 2022 Key

ISAs and Junior ISAs

The standard ISA allowance for UK residents is £20,000 per tax year. You can use your allowance by adding new money, or by moving existing investments. ISAs are a tax-efficient savings account, with any growth and income being exempt from tax. The earlier you make use of your ISA allowance, the longer your investments will benefit from the valuable tax savings. You must be 16 or over for a Cash ISA and 18 or over for a Stocks and Shares ISA.

Under 18s have a Junior ISA (JISA) allowance of £9,000 per tax year. This means that 16 and 17 year olds currently get two allowances – £9,000 for a JISA and £20,000 for an ‘adult’ Cash ISA.

Pensions Annual Allowance – £40,000

The amount you can contribute to a pension before paying tax is the value of your earned income (excluding dividends and rental income) up to a maximum of £40,000 gross (£32,000 net of basic rate tax). If you don’t have earned income (or earn less than £3,600 each year), you can still contribute up to £3,600 gross (£2,880 net). If you have already taken taxable pension benefits, your allowance is reduced to £4,000 a year. Your annual allowance is also reduced if you earn more than £200,000 in the tax year. However, you may be able to ‘carry forward’ any unused allowances from the last three tax years. Please note if you are over 75 you won’t qualify for tax relief on pension contributions. For this reason, most providers will not accept new contributions from customers aged 75 or over.

Capital Gains Tax (CGT) Allowance – £12,300

You can make capital gains of up to £12,300 without having a Capital Gains Tax liability. Sales of investments held outside ISAs, pensions and investment bonds may realise gains, as will any sales of property (other than your main private residence) or other assets you hold outside of tax-efficient wrappers. It is important to let us know of any capital gains you make outside of Wise, so that we can manage Capital Gains on your investments in the best way for you. Please note that we can’t guarantee that CGT will never be due on your investments with us.

Dividend Tax Allowance – £2,000

The dividend tax allowance remains at £2,000 per person and applies even if you choose to reinvest your dividends. Your tax voucher(s) will contain details of any dividends that you may need to declare. Dividends generated by ISA and pension investments are exempt. As with your CGT allowance, please let us know if you expect to receive any dividend income in addition to your investments managed by Wise. This will help us to manage your dividends in the best way to suit you.

This communication is not intended as advice and is for information purposes only.


Jo Radcliffe