Answers · UK 2025/26
How does Bed and ISA work in the UK?
Bed and ISA means selling investments held in a general investment account (realising any gain or loss), then repurchasing the same investments inside an ISA using your annual subscription allowance. Future gains and income are sheltered from tax. Same-day repurchase is permitted in the UK.
Full answer
Bed and ISA is a tax planning technique to move investments from a taxable general investment account (GIA) into a tax-sheltered ISA wrapper. How it works step by step: 1. Sell investments in your GIA. This realises any capital gain or loss at current CGT rates (or establishes a base cost loss for carry forward). 2. Deposit the sale proceeds into your ISA (up to your remaining annual ISA allowance). 3. Buy the same (or different) investments inside the ISA. 4. Future gains and income generated inside the ISA are permanently sheltered from income tax and CGT. Unlike the US, the UK has no wash sale rule: - In the US, selling an investment at a loss and repurchasing within 30 days disallows the loss (wash sale rule). No equivalent restriction applies in the UK. - You can sell and repurchase the same investment on the same day. Your ISA and GIA are treated as separate persons for tax purposes. The 30-day bed and breakfasting rule (different context): - The UK does have a "30-day rule" (share matching rules) that means if you sell shares and buy identical shares back within 30 days, the gain or loss is matched against the new purchase price, not the original cost. - This applies to shares within the GIA, but NOT when you repurchase INSIDE an ISA -- the ISA purchase is treated differently under the share identification rules. When Bed and ISA is most useful: - You have unrealised gains in a GIA but still have annual CGT exempt amount available (£3,000 for 2026/27) and ISA allowance remaining. - You want to simplify your tax position by gradually moving investments into an ISA shelter over multiple years. Limitations: - You are limited by your annual ISA allowance (£20,000). A large GIA portfolio cannot be sheltered in one year. - Selling in the GIA triggers CGT on gains above the annual exempt amount in the year of disposal. - Timing is important: if markets move between selling in the GIA and buying in the ISA, you may miss the price.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.