Glossary · UK
What is Bed and ISA?
Selling shares in a taxable account and immediately repurchasing them inside an ISA to shelter future gains and dividends.
Full Definition
Bed and ISA is a legitimate strategy where you sell holdings from a general investment account and rebuy the same shares within a Stocks & Shares ISA on the same day, using your annual ISA allowance (£20,000 for 2026/27). The sale crystallises any capital gain — useful for using the £3,000 Annual Exempt Amount each year — while the repurchase shifts future growth and dividends out of HMRC's reach. Most platforms offer it as a single instruction with reduced dealing costs. Unlike the old «bed and breakfasting» trick, Bed and ISA is not caught by the 30-day matching rule because the shares are inside a new tax wrapper.
How Bed and ISA is calculated
Taxable gain crystallised = min(Gain on sale, realised amount)
CGT saved per year = Gain sheltered above AEA x CGT rate- Gain on sale
- Profit realised when selling the holding from the general investment account.
- AEA
- Annual Exempt Amount for Capital Gains Tax, £3,000 for 2026/27.
- CGT rate
- Applicable Capital Gains Tax rate on shares/funds, 18% or 24% depending on income tax band.
Worked example: Selling GBP 15,000 of shares with a GBP 5,000 gain and repurchasing them in an ISA the same day crystallises the gain. GBP 3,000 is covered by the Annual Exempt Amount, leaving GBP 2,000 taxable at 18% or 24% - but all future growth and dividends inside the ISA are then permanently tax-free.
→ Try the Bed & ISA Calculator UK 2026/27 — CGT Cost and Long-Term Benefit