Bed and ISA 2026/27 | How to Shelter Your Gains Tax-Free

Bed and ISA is a strategy for UK investors: you sell shares sitting in a general investment account (GIA), realise gains within your £3,000 CGT annual exempt amount so no CGT is due on those gains, and use the proceeds to buy the same shares inside a Stocks & Shares ISA, where qualifying future gains and dividends are tax-free. The eventual benefit depends on future returns, allowances, tax rates, fees and whether the investment remains ISA-eligible.

The strategy works because the CGT exemption is use-it-or-lose-it and the ISA wrapper is permanent once contributions are made. Plan your annual sell-and-rebuy with the CGT Bed and ISA Calculator→, and check your overall exposure with the CGT Calculator→ before you execute.

Why Bed and ISA Works

The annual exempt amount is £3,000 for 2026/27, down from £6,000 in 2023/24. Couples can use two individual exemptions where eligible: transferring shares to a spouse or civil partner is normally a no-gain/no-loss event, after which each person can sell their own holding and subscribe to their own ISA within their own limit.

The £3,000 Exemption and ISA Allowance

Gains above £3,000 are taxed at 18% if they fall within the unused basic-rate band and 24% above that band. The £20,000 ISA limit covers all subscriptions across ISA types in a single tax year, so a Bed and ISA transfer that would exceed the remaining limit must be staged over more than one tax year. The exemption cannot be carried forward. Allowable losses can reduce gains, and losses brought forward must be used in the required order before the annual exempt amount is applied.

Step-by-Step: How to Execute Bed and ISA

• Identify the holdings — look for shares or ETFs in a GIA with meaningful unrealised gains; those are the ones worth moving first.
• Sell up to the exemption — calculate the gain on each sale and stop once cumulative gains for the tax year reach £3,000.
• Move the cash into an ISA — subscribe the proceeds into your Stocks & Shares ISA within the £20,000 annual limit.
• Rebuy inside the ISA — once the cash is available, you can generally buy the same eligible shares in the ISA; the CGT 30-day rule generally does not match the different-capacity ISA acquisition.
• Repeat each tax year — move the next tranche after 6 April, keeping every year's gains inside the allowance.
• Spouse first — transfer assets to a partner before selling so both £3,000 exemptions are available.

Real Example: Moving £17,500 into an ISA

Priya holds 1,000 ABC plc shares bought three years ago for £15,000, now worth £17,500 — an unrealised gain of £2,500. She sells, uses her £3,000 exemption, and repurchases inside her ISA.

For illustration only, £17,500 growing at 5% a year for 10 years would be worth about £28,500 before fees and tax. The GIA outcome cannot be reduced to one fixed tax figure: the eventual CGT depends on the gain, the annual exempt amount, losses, the investor’s income band and the year of disposal. The ISA outcome is sheltered while the investment remains within the ISA rules, but market returns are not guaranteed.

Using the Full £3,000 Exemption Across Holdings

If proceeds exceed your remaining ISA allowance, only the first £20,000 can move this tax year; the balance waits for 6 April, when a fresh £20,000 limit starts. Alternatively, transfer half the holdings to a spouse so each partner can subscribe £13,000 into their own ISA in the same year.

Spousal Transfers: Doubling the Strategy

Married couples and civil partners can effectively run two Bed and ISA plans at once. Transfers of assets between spouses or civil partners are normally no-gain/no-loss events for CGT, so moving half of a GIA holding to a partner costs no immediate CGT and the receiving spouse inherits the original base cost. Each spouse then sells their own tranche, uses their own £3,000 exemption, and subscribes up to £20,000 into their own ISA. The combined capacity can be £6,000 of annual exempt gains and £40,000 of ISA subscriptions, subject to each person’s circumstances and available cash.

There is no requirement to transfer cash — shares move directly between the partners' accounts. Do the transfer before selling so each exemption is used against the right gains, and keep a record of the original acquisition cost for the receiving spouse, because that base cost carries across. This is one of the few genuinely free tax upgrades available to couples, and it compounds every year it is repeated.

Reporting and the 30-Day Rule

The 30-day bed-and-breakfasting rule matches a disposal with an acquisition of the same class of shares by the same person in the same capacity within 30 days. A GIA disposal and an ISA acquisition are generally in different capacities, so the ISA purchase is not normally matched to the GIA disposal for this rule. You still face execution timing, price movement and provider constraints. For reporting, gains above the annual exempt amount must be reported using the available HMRC route; if you are already registered for Self Assessment, proceeds above £50,000 can require reporting even where gains are below the allowance. Check the current HMRC reporting conditions rather than relying on a single threshold.

Check the investment and the provider before selling

Not every holding in a GIA can be repurchased inside an ISA. Confirm that the share, fund, exchange-traded product or investment trust is a qualifying ISA investment and that the receiving provider offers it. A provider may restrict the dealing list, require a cash subscription, or operate a same-day Bed and ISA service with its own cut-off. A tax calculation cannot remove provider rules, dealing charges or the risk that the market moves between sale and repurchase.

Ask the provider whether it will transfer cash, how long the sale proceeds take to settle, whether the ISA subscription is made in the current tax year and when the replacement purchase is executed. Keep the contract notes, fees, exchange rates and ISA subscription confirmation. If the provider cannot complete the repurchase before 5 April, the unused subscription capacity does not move backwards into the previous tax year.

Gain calculation is more than current price minus original price

Calculate the disposal using the actual share quantity, acquisition history, allowable costs, corporate actions, equalisation amounts and any pooled-share rules that apply. A platform's displayed unrealised gain may not include every tax adjustment. If the holding was acquired through several purchases, employee shares, an inheritance, a dividend reinvestment or a previous transfer, preserve the underlying records before deciding how much to sell.

Selling enough proceeds to use £3,000 of gain is not the same as selling £3,000 of shares. The gain percentage differs between holdings, and fees reduce the proceeds and can affect the calculation. Model each tranche and leave a margin when the price is volatile. If a loss is realised, record it separately and check the HMRC claim and ordering rules instead of treating it as a negative ISA subscription.

Tax-year deadlines and execution risk

The tax year runs to 5 April, but a trade instruction, settlement date, ISA subscription and repurchase can occur at different times. Check the provider's published cut-offs and do not wait until the final afternoon. A sale that executes after the intended tax-year boundary may use a different annual exempt amount, while cash that is not subscribed in time may use a different ISA year's limit.

The strategy also changes investment exposure temporarily. The price may rise while cash is waiting, fall before repurchase or become unavailable because a market is closed. Decide in advance whether the tax saving justifies the dealing cost, spread, lost dividends and time out of the market. Bed and ISA is a tax-wrapper strategy, not a guarantee of a better investment return.

Frequently Asked Questions

Plan this year\u2019s transfers with the CGT Bed and ISA Calculator→ and see the ten-year effect on your portfolio with the ISA Calculator→. For the underlying rules, read Capital Gains on Shares 2026/27 and ISA Allowance 2026/27.

Official sources

• GOV.UK: Individual Savings Accounts
• GOV.UK: How ISAs work
• GOV.UK: Capital Gains Tax rates
• GOV.UK: Capital Gains Tax rates and allowances
• GOV.UK: Work out if you need to pay Capital Gains Tax
• HMRC Capital Gains Manual: CG51560
• HMRC Capital Gains Manual: CG22200

These GOV.UK and HMRC pages are the official references for ISA rules, disposals, exemptions and Capital Gains Tax reporting. Confirm the current allowance and your provider's transfer process before selling or repurchasing investments.