Bed and Spouse vs Bed and ISA: Using the GBP 3,000 CGT Exemption 2026/27

With the Capital Gains Tax annual exempt amount cut to just GBP 3,000 in 2026/27, using it every year matters far more than it used to. Two tactics let you crystallise gains tax-free without losing your holding: bed and ISA and bed and spouse. They solve different problems, and knowing which to reach for — or whether to combine both — can save a meaningful amount in tax over a decade of investing.

UK 2026/27 rates at a glance

Before working through examples, here are the key numbers for the current tax year.

The CGT annual exempt amount has held at GBP 3,000 since 2024/25, down from GBP 12,300 in 2022/23. With such a narrow exemption, allowing it to go unused each April is a real cost: a higher-rate taxpayer who ignores a GBP 3,000 gain each year forfeits GBP 720 of potential tax saving annually (GBP 3,000 at 24%).

Why you cannot simply sell and rebuy

If you sell shares to use your GBP 3,000 exemption and rebuy the same shares within 30 days, the 30-day bed and breakfasting rule matches your disposal to that repurchase. The gain is effectively cancelled and your exemption is wasted. Bed and ISA and bed and spouse both get around this legitimately.

Bed and ISA

You sell the holding in your taxable General Investment Account and rebuy it inside your Stocks and Shares ISA. Two things happen:

• The sale crystallises a gain that you cover with your GBP 3,000 exemption.
• The repurchase is inside an ISA, so all future growth and income are tax-free forever.

It also uses your GBP 20,000 ISA allowance, which itself does not carry forward.

Worked example — basic-rate investor

Dan holds a global index tracker outside any wrapper. He purchased GBP 9,000 of units two years ago; they are now worth GBP 12,000. His unrealised gain is GBP 3,000. He is a basic-rate taxpayer with his full GBP 20,000 ISA allowance unused.

Step 1. Dan sells GBP 12,000 of units in his GIA on 10 March 2027. Step 2. He subscribes GBP 12,000 into his Stocks and Shares ISA on the same day and rebuys the identical tracker fund.

• Gain crystallised: GBP 3,000.
• Annual exempt amount used: GBP 3,000.
• CGT payable: GBP 0.
• ISA allowance consumed: GBP 12,000 of his GBP 20,000.

The GBP 12,000 now sits inside the ISA. If the fund doubles to GBP 24,000 over the next decade, the GBP 12,000 growth will be entirely free of CGT. The cost of doing nothing, by contrast, would have been CGT at 18% on that eventual GBP 12,000 gain — GBP 2,160 — assuming he remains a basic-rate taxpayer throughout.

Bed and spouse

Here you sell to crystallise your gain within the GBP 3,000 exemption, and your spouse buys the same asset at the same time. The 30-day rule does not bite because the buyer is a different person. The family keeps the holding, but it now sits in your spouse's name with a higher cost base.

This is useful when:

• You have already used your ISA allowance for the year.
• The asset will not fit in an ISA, for example certain funds or larger holdings.
• You want to move the asset towards a lower-rate spouse for future dividend or gain planning.

Worked example — higher-rate investor with no ISA room

Aisha has a GBP 6,000 unrealised gain on a fund and no ISA room left. She sells the whole holding, crystallising GBP 6,000:

• GBP 3,000 covered by her exemption, tax GBP 0.
• GBP 3,000 above it at 24% (she is a higher-rate taxpayer) = GBP 720.

Her husband Rohan, a basic-rate taxpayer, buys the same fund on the same day. Future gains will now fall in his band at 18%, rather than her 24%. Next year Aisha can crystallise another GBP 3,000 of a different holding against a fresh exemption. By splitting the disposal across two tax years and two people, the couple can progressively clear positions using up to GBP 6,000 of combined exemptions each year.

Worked example — couple combining both techniques

Marcus and Priya each earn above GBP 50,270. They each have GBP 3,000 of unrealised gains in separate GIA holdings, and Priya has not yet used her ISA allowance, but Marcus has.

• Priya sells her GIA holding and beds and ISAs: gain GBP 3,000, CGT GBP 0, asset now in her ISA.
• Marcus sells his GIA holding: gain GBP 3,000, annual exempt amount used, CGT GBP 0. Priya buys the same asset in her own GIA (or her ISA if she has remaining room). Marcus has crystallised his gain tax-free; the family keeps the exposure.

Combined result: GBP 6,000 of gains sheltered, no CGT payable, ISA room efficiently used.

Which to use

The clearest hierarchy is:

1. Prefer bed and ISA when you still have ISA allowance left, because future growth becomes tax-free, not just the cost base reset.
2. Use bed and spouse when ISA room is gone, when the asset cannot go in an ISA, or when you want the asset taxed at a lower-rate spouse's future CGT band.
3. Combine them: bed and ISA your own allowance, bed and spouse into a partner's ISA in the same season, doubling the annual shelter.

Use the capital gains tax calculator to model your specific gain and find out exactly how much tax you would save by crystallising now versus waiting.

Common mistakes to avoid

Forgetting the ISA allowance is consumed. Bed and ISA works beautifully, but if you have already put GBP 18,000 into a Cash ISA you only have GBP 2,000 of Stocks and Shares ISA room left. Many people discover this too late in April.

Treating the 30-day rule as the only constraint. The 30-day rule matches same-investor same-security repurchases. But if you sell in a GIA and rebuy in a pension (SIPP), the 30-day rule still technically does not apply in the ISA-matching sense, though different rules govern pensions. Always check the specific wrapper.

Assuming bed and spouse is a formality. HMRC can challenge arrangements that lack genuine economic substance. Your spouse must actually buy the asset with their own funds (gifted from you is fine — gifts between spouses are not taxable — but the trade must be real), and they must genuinely own it afterwards. Sham arrangements where you retain control are anti-avoidance territory.

Missing the Self Assessment reporting threshold. Even if your gain is within the GBP 3,000 exemption and no tax is due, you must report via Self Assessment if your total disposal proceeds in the tax year exceed GBP 50,000. Missing this filing can result in a penalty even when no tax is owed.

Leaving it too late. Settlement periods on share deals are typically T+1 for UK equities. If you want a bed and ISA or bed and spouse to count in 2026/27, the trade must settle before 5 April 2027. Allow at least a few days either side of the year-end deadline and check your platform's cut-off dates.

Not refreshing the calculation each year. Many investors set up a bed and ISA in one year and then forget about it. With the annual exemption stuck at GBP 3,000, each year that passes without crystallising available gains on your GIA holdings is a year you are gifting future tax to HMRC unnecessarily.

A pre-April checklist

• Total your realised gains and losses so far this tax year.
• Identify GIA holdings with unrealised gains up to GBP 3,000 per person.
• Check your remaining ISA allowance for the year.
• Decide whether to bed and ISA, bed and spouse, or both.
• Confirm your platform's settlement and ISA subscription cut-off dates ahead of 5 April.
• Keep all contract notes and ISA transfer confirmations.
• Check whether total disposal proceeds exceed GBP 50,000; if so, Self Assessment reporting is required even if no tax is due.

If you also hold assets with unrealised losses, consider crystallising those in the same tax year to offset any gains above the GBP 3,000 exemption. Losses realised in earlier years that you have reported to HMRC can be carried forward indefinitely and offset against future gains.

For year-round monitoring of your unrealised gains position, the investment tax planner lets you track holdings across wrappers and model the tax impact of crystallising different positions before 5 April.

This is general information and not financial advice. CGT, spouse transfers and the bed and breakfasting rule have details worth checking, especially for residential property. See HMRC's guidance on Capital Gains Tax rates and the annual exempt amount at gov.uk for the authoritative position.