Allowances that shape a long-term plan
| Item | 2026/27 figure used on this site | Why a trader and an investor both care |
|---|---|---|
| Adult ISA allowance | £20,000 across ISA types | Shelters growth and income. Use-it-or-lose-it by 5 April. A day-trading style rarely belongs here. |
| Lifetime ISA | £4,000, inside the £20,000 | A 25% bonus exists for qualifying first homes and later life, with withdrawal charges if you break the rules. Not a trading pot. |
| Junior ISA | £9,000 | A child’s wrapper. The child can access it at 18. Do not treat it as an extension of your own dealing account. |
| Dividend allowance | £500 | Above it, dividend tax for 2026/27 is 10.75% basic, 35.75% higher, 39.35% additional. Inside an ISA, not applicable. |
| CGT annual exempt amount | £3,000 | Gains above it: 18% within the basic-rate band and 24% above it. The exempt amount is not per trade. It is for the year. |
| Personal allowance | £12,570 | Frozen. It is about income, but it frames which CGT and dividend band you are likely to be in. |
| Stamp Duty Reserve Tax | 0.5% on most UK share purchases | Paid by buyers of UK shares. Not charged on the CFD or the spread bet itself. Lethal to high-frequency share round trips, mild if you buy once and hold for years. |
From 6 April 2026 the basic and higher rates of dividend tax each rose by two percentage points. The additional rate stayed at 39.35%. That change makes the ISA relatively more useful for income-paying holdings than it was the year before. It does not make a high-cost fund wise just because it sits in an ISA.
As announced for 6 April 2027, people under 65 are due a lower annual cap on cash ISAs, widely reported at £12,000, while the overall ISA allowance stays at £20,000 so that the remainder can go into a stocks and shares ISA. If you are planning with cash and equities together, read the date on the rule, not just the headline number.
Three products, three tax characters
Take a profitable day, and then a losing month, and ask what HMRC is likely to see. For a private individual who is not running a trade as a business, the usual sketch is:
- UK shares in a general investment account. The purchase attracts stamp duty. Gains sit inside capital gains tax above the annual exempt amount. Losses on chargeable assets can generally be set against gains. Dividends sit inside dividend tax above the dividend allowance. Hold the same shares in an ISA and both the gain and the dividend fall out of those taxes.
- Contracts for difference. No stamp duty on the contract. Net gains are generally chargeable to capital gains tax above the exempt amount. Losses are generally allowable against gains. If HMRC decided your activity was a trade, income tax and National Insurance could enter instead. That is a facts-and-circumstances question, not a badge you award yourself.
- Financial spread bets. For most private individuals the result is outside capital gains tax, because it is treated as betting. The mirror image matters: losses are not allowable. You do not “get the tax back” on a bad quarter. You also do not create a CGT loss to shelter a gain you made elsewhere. The firm offering the bet, if it is doing so properly in the UK, is FCA-authorised. Regulation is about conduct and safeguards, not about whether your stake was wise.
Shares admitted to AIM are often outside stamp duty. That fact launches a thousand confusions. Being free of 0.5% friction does not make a small company a conservative holding, and it does not turn a day trade into an investment.
A friction sketch, not a recommendation
Buy £10,000 of ordinary UK shares in a taxable account and sell them the same day. Stamp duty on the way in is about £50. Whatever you made or lost on the move, £50 plus the spread plus commission has already been spent. Buy the same £10,000 and hold it for a decade and that £50 is a one-time toll on the way into a long ownership. The market does not refund the toll because your idea was elegant.
A CFD that references the same shares skips the £50 and charges you inside the spread. If you use leverage, your cash outlay is smaller than £10,000 and your exposure may not be. A 2% adverse move on £10,000 of exposure is £200. If you only posted £2,000 of margin, that is a tenth of the margin, gone, before the day has become a story you want to tell.
Pensions, briefly, because they are the real long fund
The standard annual allowance for pension contributions is £60,000, tapered for higher incomes and limited by relevant UK earnings for personal contributions. If you have flexibly accessed a money-purchase pension, the money-purchase annual allowance can drop the room sharply, to £10,000 on current rules. Tax relief on the way in, and tax on the way out under pension rules, is a different regime from an ISA. A SIPP is not a clever place to try intraday tactics. Access rules and tax charges exist for a reason, and “I found a workaround” is a sentence to take to a regulated adviser before you touch anything.
Bed and ISA, and other phrases that hide a sale
Selling an investment in a taxable account and buying it back inside an ISA can move future growth into the shelter. The sale is still a disposal. If you are above the exempt amount, capital gains tax can be due on that “administrative” step. Do the arithmetic before you feel efficient.
Records a day trader actually needs
- Date, instrument, direction, size, open price, close price.
- Commission, financing, and the spread if your platform lets you see it.
- Whether the product was a share, a CFD, or a spread bet. Mixing them in one mental pile is how people mis-file a tax year.
- A running total of chargeable gains and losses, separate from betting results.
- Contract notes. A platform can change its export. Download as you go.
Self Assessment has deadlines and payment dates that move only when HMRC says so. If your gains, or your income, might need a return, find out in the autumn rather than in January. A qualified tax adviser is cheaper than a creative interpretation.
Nothing on this page is a calculation of tax due.
Residency, domicile concepts now replaced in parts of the code by residence-based tests, Scottish rates of income tax, and the badges of trade can all move the answer. Start with GOV.UK, then get advice if the sums are more than pocket money. Our disclaimer is the short version of that sentence.