Answers · UK 2025/26

What is a Bed and ISA transfer and why might I use one?

Bed and ISA involves selling investments held outside an ISA (in a general investment account) and immediately repurchasing the same or similar investments inside an ISA, sheltering future growth and income from tax. It can trigger Capital Gains Tax on the sale if your gain exceeds the £3,000 annual exemption, so the tax cost needs weighing against the ongoing tax-free benefit.

Last updated: 2 July 2026Last reviewed: 2 July 2026How we verify

Full answer

Bed and ISA is a commonly used strategy for investors who have built up holdings outside a tax-efficient wrapper and want to move them into the shelter of an ISA without simply withdrawing and spending the funds. **How the process works** You sell ("bed") investments held in a general investment account (or other unwrapped account), then use the proceeds to immediately repurchase the same or similar investments within a Stocks and Shares ISA -- many platforms offer this as a single streamlined process, minimising the time your money is out of the market between the sale and repurchase. **Why this triggers a taxable event** Selling the investments outside the ISA is treated as a disposal for Capital Gains Tax purposes, just like any other sale -- if the sale realises a gain above the £3,000 annual CGT exemption for 2026/27, tax is due on the excess at 18% (basic rate) or 24% (higher rate) for most assets. **Why it can still be worthwhile despite the CGT cost** Once the investments are inside the ISA, all future growth and income (dividends, interest) are entirely tax-free, permanently -- for investors planning to hold the investments for many more years, the ongoing tax-free treatment inside the ISA can significantly outweigh a modest CGT bill paid once during the transfer, particularly for investors expecting substantial future growth. **Using your annual CGT exemption efficiently** Bed and ISA is often used strategically to make use of your £3,000 annual CGT exemption each year, moving a portion of unwrapped holdings into an ISA annually up to the point where the gain would exceed the exemption, gradually "ISA-wrapping" a large unwrapped portfolio over several tax years without triggering an unnecessary CGT bill in any single year. **You still need available ISA allowance** The amount you can move via Bed and ISA in a single tax year is capped by your remaining annual ISA allowance (up to £20,000 for 2026/27, minus anything already contributed that year) -- for very large unwrapped portfolios, moving everything into an ISA can take several years given the annual allowance limit. **Worked example** Someone holds £15,000 of shares outside an ISA, with an unrealised gain of £2,500 (below the £3,000 annual CGT exemption). They Bed and ISA the full holding: selling triggers no CGT (since the gain is within the exemption), and they immediately repurchase the same shares inside a Stocks and Shares ISA, using £15,000 of their £20,000 annual ISA allowance -- from this point on, all future growth and dividends from these shares are entirely tax-free. **Market risk during the process** Even with a fast "same-day" Bed and ISA process offered by many platforms, there is a brief window where you are out of the market between selling and repurchasing, during which prices could move -- this is generally a minor consideration compared with the tax benefits, but worth being aware of, particularly in volatile market conditions. **Practical tip** Consider Bed and ISA as an annual strategy for gradually moving unwrapped investments into tax-efficient ISAs, timing transfers to make full use of both your annual CGT exemption and your ISA allowance each tax year, rather than attempting a single large transfer that might trigger a significant CGT bill.