How This Tool Works
📋 Purpose
With the dividend allowance slashed from £2,000 to £500 and the CGT exemption cut from £12,300 to £3,000 in recent years, the cost of investing outside an ISA has ballooned. This tool models year-by-year dividend tax, CGT realisation driven by portfolio turnover, and the break-even pot size — so you can decide whether to fill your ISA first, use a SIPP for spill-over, or accept GIA drag.
⚙️ How It Works
- 1Enter monthly contribution, horizon, and existing pot.
- 2Enter expected dividend yield and capital growth.
- 3Pick rebalancing frequency (drives CGT realisation).
- 4Select your tax band for dividend and CGT rates.
- 5We allocate to ISA first (up to £20,000/yr cap).
- 6We spill excess into GIA and apply full UK tax rules.
- 7We show year-by-year growth and total tax drag.
ISA vs GIA after tax — UK, 2026
How much will dividend tax and CGT eat from a general investment account vs a Stocks & Shares ISA?
Models the post-2024 £500 dividend allowance and £3,000 CGT exemption, turnover-driven CGT realisation, and full year-by-year tax drag across a 1-40 year horizon.
Your contributions
ISA cap is £20,000/yr (£1,666/mo). Above that spills into GIA.
Assumed to start in ISA.
Expected returns and strategy
FTSE 100 ~3.5%, MSCI World ~1.8%, S&P 500 ~1.3%.
Long-run equity real return 5-7% (nominal 7-9%).
Used to show real-terms values. ONS CPIH ~2.5% (Apr 2025).
Was this tool helpful?
Your quick feedback helps improve our tools
Complete Guide: ISA vs GIA (UK, 2026)
How to compare after-tax investment growth honestly, and when a GIA is still worth it.
📅 Last updated: April 2026
Quick Tips
Jump-start your understanding with these essential tips
The £20,000 ISA allowance is a "use it or lose it" annual wrapper. Filling it should be your first priority unless you expect to spend the money within 2 years.
Down from £2,000 in 2022. Even modest GIAs now generate taxable dividends. High-yield income funds outside an ISA bleed tax from year 1.
Standard gains now 18% (basic) / 24% (higher) for residential property, 10% / 20% for everything else. Plan realisations ahead of Budget announcements.
SIPP contribution gets 40% relief up-front and tax-free growth. GIA gets no relief and taxable growth. For £10k/yr in GIA vs SIPP, SIPP is ~£150k richer after 20 years at higher rate.
If you have a GIA and unused ISA allowance, sell £20k of GIA holdings in late March, buy them back inside your ISA in April. Uses two years' CGT exemptions (£6k) in quick succession.
Step-by-Step Guide
Follow these steps to get the most from this tool
£1,666/mo fills the £20,000 ISA. Above that, we spill into GIA.
Tax drag compounds — 1 year vs 20 years is dramatically different. Most long-term investors should model 10-25 years.
FTSE 100 ETF: dividend ~3.5%, growth ~4%. Global all-cap: dividend ~1.8%, growth ~5-6%. S&P 500: dividend ~1.3%, growth ~7%. High-yield funds make GIA tax drag much worse.
Buy-and-hold ETF = "never". Target-allocation portfolio rebalanced yearly = "annual". Multi-asset or actively managed = "quarterly". Higher turnover = more CGT realisation = more tax.
Higher-rate taxpayers pay 33.75% on dividends (vs 8.75% basic). This is the single biggest GIA drag factor.
The ISA/GIA area chart shows compound growth. The "break-even pot" figure tells you when a GIA actually starts costing meaningful tax for your specific setup.
Advanced Topics
Deep dives for advanced users
Transfers between spouses are CGT-free (no gain / no loss basis). If one spouse has unused CGT exemption (£3k), realise the gain in their name. If they're basic-rate and you're higher-rate, even realised dividends save tax (8.75% vs 33.75%).
Accumulation units re-invest dividends automatically — but you still pay dividend tax on them each year in a GIA (excess reportable income rules). This catches many DIY investors. Stick to ETFs in GIAs for cleaner reporting.
(1) You're already at the £60k annual pension allowance. (2) You need the money before 57. (3) You're a basic-rate taxpayer expecting to become higher-rate in retirement. (4) You want to pass wealth via gifts (pensions are increasingly IHT-exposed from April 2027). For most other scenarios SIPP wins.
Selling a GIA into an ISA uses your £20k ISA allowance. Selling into a SIPP gets you 20-45% tax relief on top of the transfer. For higher-rate taxpayers, Bed & SIPP is often more valuable than Bed & ISA — especially with the new £500 dividend allowance making GIAs painful.
See LISA vs Pension if you're saving for a first home, or Salary Sacrifice Pension to model SIPP contributions.
You Might Also Like
Other tools that pair well with this one
📚Read More Articles
Discover helpful guides and insights
Frequently Asked Questions
Was this tool helpful?
Your quick feedback helps improve our tools