General Investment Account vs ISA: What Happens When You Max Your ISA (2026/27)

You have paid in the full GBP 20,000 ISA allowance for 2026/27 and still have money to invest. The usual next home is a General Investment Account (GIA): an ordinary, taxable dealing account with no contribution limit. The trade-off is that, unlike an ISA, a GIA is exposed to both dividend tax and Capital Gains Tax (CGT).

How a GIA is taxed in 2026/27

Two separate taxes can apply, and they use separate allowances.

• Dividends: the first GBP 500 of dividend income across all your taxable holdings is tax free (the dividend allowance). Above that, dividends are taxed at 10.75% for basic-rate taxpayers, 35.75% for higher-rate and 39.35% for additional-rate.
• Capital gains: when you sell, the first GBP 3,000 of net gains each year is covered by the annual exempt amount. Gains above that are taxed at 18% within your basic-rate band and 24% above it (the same rates now apply to shares and to residential property).

Inside an ISA, none of this applies: dividends and gains are completely tax free. That is why you fill the ISA first.

Worked example: GBP 30,000 to invest

Suppose you have GBP 30,000 to invest in a global equity fund yielding roughly 2% in dividends. You put GBP 20,000 in your stocks and shares ISA and the remaining GBP 10,000 in a GIA. You are a higher-rate taxpayer.

In the GIA, GBP 10,000 yielding 2% produces about GBP 200 of dividends. That sits inside the GBP 500 dividend allowance, so no dividend tax this year.

Now fast-forward. The GIA holding grows and you sell it for a GBP 5,000 gain. Subtract the GBP 3,000 annual exempt amount, leaving GBP 2,000 taxable. As a higher-rate taxpayer the rate is 24%:

• GBP 2,000 x 24% = GBP 480 of CGT.

Had the same growth happened inside the ISA, the bill would have been GBP 0.

Keeping the GIA bill down

A taxable account is not something to fear; it just needs managing. Practical levers:

• Use the GBP 3,000 CGT allowance every year. Selling small amounts annually to realise gains up to the allowance resets your cost base and avoids one big future bill.
• Run bed and ISA each new tax year. Sell GBP 20,000 from the GIA and immediately rebuy inside your fresh ISA so future growth becomes tax free.
• Hold your highest-yielding assets in the ISA and lower-yielding growth assets in the GIA, so more of your dividend income is shielded.
• Use a spouse's allowances. Transfers between spouses and civil partners are exempt, so you can spread holdings to use two dividend allowances, two CGT allowances and two ISA allowances.
• Choose accumulation or income funds deliberately, and keep good records: accumulation units still generate taxable dividend income even though nothing is paid out.

When a GIA is the right call

A GIA makes sense once the ISA and any pension allowances you want to use are full. For most people the order is: workplace pension up to the employer match, then ISA up to GBP 20,000, then either more pension or a GIA depending on whether you want access before retirement. The GIA wins on flexibility (no limits, withdraw any time) and loses on tax.

If your taxable income could push you near GBP 100,000, remember that pension contributions reduce adjusted net income, which can be more valuable than a GIA because of the 60% effective trap as the personal allowance tapers away.

To see how dividend and CGT bills change with your income, try the CalcHub dividend tax calculator and the capital gains tax calculator, and confirm the current allowances on gov.uk before you act.