Bed and ISA

What is Bed and ISA?

Bed and ISA means selling investments held in a GIA (a taxable account) and buying them back inside an ISA (a tax-free account). The investments “go to bed” in one place and “wake up” in another.

Why would you do this?

To move existing investments into a tax-free wrapper. Once inside an ISA, all future growth is free from Capital Gains Tax and Dividend Tax.

If you started investing before opening an ISA, or invested more than your ISA allowance in previous years, Bed and ISA lets you gradually move those investments into shelter.

How does it work?

1. Sell investments in your GIA
2. Transfer the cash to your ISA (up to your £20,000 annual limit)
3. Buy the same investments inside the ISA

Some platforms offer a single “Bed and ISA” button that does all three steps automatically.

Is there a catch?

When you sell in step one, you might trigger Capital Gains Tax if your profit exceeds your £3,000 annual allowance. You need to weigh the tax cost now against the tax savings later.

There’s also usually a brief period where you’re out of the market. If prices jump while your money is in transit, you’ll rebuy at a higher price.

Key points about Bed and ISA

• Move investments from GIA to ISA. Shelter future growth from tax
• May trigger CGT if your gains exceed £3,000
• Limited by ISA allowance. £20,000 per year
• Some platforms automate it. Look for a “Bed and ISA” option