A Bed and ISA explained
A Boring Money reader asked about a Bed & ISA and the tax implications — here is our answer.
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A Bed & ISA is a process where you sell investments held in a taxable account, often called a General Investment Account (GIA), and then immediately repurchase them inside an ISA (Individual Savings Account).
People do this to move their investments into an account where all future growth and income are tax-free.
Here is how it works in practice:
You sell your investments in a standard account (like a General Investment Account).
The cash proceeds are then used to repurchase the same (or different) investments inside your ISA.
Once inside the ISA, you won’t pay capital gains tax or further income tax on those investments.
Things to watch out for:
You may trigger a capital gains tax (CGT) event when selling the investments, if the gain exceeds your annual CGT allowance.
You’re limited by the annual ISA allowance (£20,000 in 2025/26).
There may be dealing costs or spreads when selling and rebuying.
It is essentially a way of “re-homing” your investments into a tax-efficient ISA.
The value of investments may go down as well as up and you may get back less than you invest. Past performance is not a reliable indicator of future performance. An investment in a Stocks & Shares ISA will not provide the same security of capital associated with a Cash ISA. The favourable tax treatment of ISAs may be subject to changes in legislation in the future. The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances. Investing should be regarded as a long-term and should fit in with your overall attitude to risk and financial circumstances. The Bed & ISA process may involve market timing risk, as the price of the investment may move between the sale and repurchase. If you are unsure how this information applies to your situation, you should seek regulated financial advice.
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Suppose an investor has £100,000 to invest. In the first year:
£80,000 is placed in a General Investment Account (GIA), which is taxable.
£20,000 is placed in an ISA, making full use of that year’s ISA allowance.
In the following tax year, the investor wants to use their new ISA allowance. To do this, they could:
Sell £20,000 worth of shares from the GIA.
Repurchase those shares within the ISA, this is the Bed & ISA transaction.
After the transaction, the investor’s portfolio looks like this:
£40,000 held inside the ISA.
£60,000 still in the GIA.
This process can be repeated each year, gradually moving more of the portfolio into the tax-efficient ISA wrapper, where all future growth and income are protected from tax.
The value of investments may go down as well as up and you may get back less than you invest. Past performance is not a reliable indicator of future performance. An investment in a Stocks & Shares ISA will not provide the same security of capital associated with a Cash ISA. The favourable tax treatment of ISAs may be subject to changes in legislation in the future. The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances. Investing should be regarded as a long-term and should fit in with your overall attitude to risk and financial circumstances. The Bed & ISA process may involve market timing risk, as the price of the investment may move between the sale and repurchase. If you are unsure how this information applies to your situation, you should seek regulated financial advice.
