Savings And Investments Guide -- Updated July 2026
Bed and ISA Guide 2026/27
Bed and ISA lets you move existing investments held outside a tax wrapper into a Stocks and Shares ISA by selling and immediately rebuying them, so future growth and income are sheltered from tax. This guide explains how it works, the costs and risks, and how it fits within the £20,000 annual ISA allowance and £3,000 CGT exempt amount for 2026/27.
What Bed and ISA Is
Bed and ISA is a two-step transaction: you sell an investment held outside a tax wrapper, typically in a general investment account, and use the resulting cash to buy the same or a similar investment inside a Stocks and Shares ISA. Because ISA rules only allow cash subscriptions (with limited exceptions for certain employee share scheme shares), selling and rebuying is the standard route for moving an existing holding into the tax-free ISA wrapper rather than transferring the shares directly.
How the Process Works
Most investment platforms offer a combined Bed and ISA instruction: you tell the platform which holdings and how much to sell in your general account, and it automatically uses the proceeds to repurchase the same investment inside your ISA, often on the same trading day. Where the sale and repurchase are on the same platform, this can happen almost instantly; moving cash between different providers can take longer and increases the time you are out of the market.
Capital Gains Tax Implications
Selling the investment outside the ISA is a disposal for Capital Gains Tax purposes. Any gain is measured against your £3,000 annual CGT exempt amount for 2026/27; gains above the exempt amount are taxed at 18% for basic rate taxpayers or 24% for higher and additional rate taxpayers on most listed shares and funds. Many investors deliberately use Bed and ISA to realise gains within the annual exempt amount each year, since unused CGT exemption cannot be carried forward.
Costs and Market Risk
Bed and ISA usually involves two sets of dealing charges (one for the sale, one for the repurchase) plus the bid-offer spread on both trades, so you typically end up holding slightly fewer shares or units for the same cash amount. There is also market risk during the brief window between the sale and repurchase, since a sharp price move either way changes how many shares the ISA proceeds buy back. Some platforms discount the combined dealing charge for a Bed and ISA instruction to reduce this cost.
The Annual ISA Allowance
The proceeds you move into the ISA count against your overall £20,000 annual ISA allowance for 2026/27, shared across all ISA types you hold (Cash ISA, Stocks and Shares ISA, Lifetime ISA up to its own £4,000 sub-limit, and Innovative Finance ISA). Once the £20,000 is used for the tax year, no further Bed and ISA transactions are possible until the next tax year starts on 6 April, so timing across tax years is a key part of planning larger transfers.
Frequently Asked Questions
What does "Bed and ISA" mean?
Bed and ISA is the process of selling investments held outside a tax wrapper -- typically in a general investment account -- and using the cash to immediately repurchase the same (or similar) investments inside a Stocks and Shares ISA, so future growth and income become tax-free. The name comes from the older "bed and breakfast" CGT technique of selling and rebuying.
Why would I bother selling and rebuying the same investment?
Moving an investment into an ISA shelters it from future Capital Gains Tax and Income Tax on dividends or interest. Because you cannot transfer existing shares directly into an ISA (only cash can go in, aside from certain employee share scheme shares), selling and rebuying inside the ISA is the standard way to move holdings into the tax-free wrapper.
Does selling my shares for Bed and ISA trigger Capital Gains Tax?
Potentially, yes. Selling the shares outside the ISA is a disposal for CGT purposes. Any gain is measured against your £3,000 annual CGT exempt amount for 2026/27; gains above that are taxed at 18% (basic rate) or 24% (higher/additional rate) for most assets including listed shares. Many people time Bed and ISA to use up their annual exempt amount each year rather than let it go to waste.
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How much can I put into an ISA using Bed and ISA?
The proceeds from the sale still count against your overall £20,000 annual ISA allowance for 2026/27, shared across all your ISA types (Cash ISA, Stocks and Shares ISA, Lifetime ISA and Innovative Finance ISA). You cannot exceed the £20,000 total in a tax year regardless of how many separate Bed and ISA transactions you carry out.
Are there costs involved in Bed and ISA?
Yes. You typically pay a dealing charge to sell the shares and another dealing charge to rebuy them, and there is a bid-offer spread on both trades, meaning you buy back slightly fewer shares (or units) than you sold for the same cash amount. Some platforms offer a discounted combined Bed and ISA dealing charge to reduce this cost.
Is there a risk the share price moves between the sale and the repurchase?
Yes -- this is called "market risk" or "being out of the market." Because the sale and repurchase are two separate trades, there is a brief window (often just seconds with same-platform automated Bed and ISA tools, but potentially longer if moving between platforms) where you do not hold the investment, so a sharp price move in either direction affects the number of shares you end up with in the ISA.
Can I do Bed and ISA with a spouse or partner instead of selling my own shares?
A related technique is "Bed and Spouse" (or "Bed and ISA" combined with an inter-spouse transfer), where you transfer shares to a spouse or civil partner tax-free using the no-gain/no-loss rule for CGT, and they then sell and repurchase into their own ISA using their own £20,000 allowance -- effectively doubling the household's annual ISA capacity for the same underlying investment.
What happens if I have already used my ISA allowance for the year?
If you have already subscribed the full £20,000 for the tax year across your ISAs, you cannot do further Bed and ISA transactions until the new tax year starts on 6 April, since the proceeds of the sale still need to fit within your remaining ISA allowance headroom for the current year.
Does Bed and ISA reset the "bed and breakfasting" 30-day CGT rule?
HMRC's 30-day share matching rule (which normally prevents selling and rebuying the same share within 30 days to manufacture a loss or gain) does not block Bed and ISA, because the repurchase happens in a different account (the ISA) rather than the same account, so the shares in the ISA are treated as a genuinely new, separate holding for tax purposes.
Is Bed and ISA worth doing every year?
For many long-term investors holding assets outside a tax wrapper, using Bed and ISA annually to shelter part of a portfolio -- ideally within the CGT annual exempt amount to avoid triggering a tax bill -- is a common and sensible way to gradually move savings into a tax-free environment, though the value depends on your dealing costs, the size of any gain, and your overall ISA allowance headroom for the year.
Disclaimer: This guide reflects the £20,000 ISA allowance and £3,000 CGT annual exempt amount confirmed for 2026/27. This guide is for general information only and is not professional advice. Consult a qualified adviser and refer to gov.uk for current official guidance before relying on any treatment.
