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Investing how-to · UK 2026/27

How to do bed-and-ISA without triggering UK CGT

Bed-and-ISA is the legal manoeuvre of selling assets from a General Investment Account (GIA) and immediately repurchasing them inside an ISA. It moves the assets from a taxable wrapper to a tax-free wrapper. Done carefully, it can migrate large GIA portfolios into ISA with little or no CGT — by using the £3,000 annual exempt amount and avoiding the 30-day rule pitfalls.

7-minute read

To do bed-and-ISA correctly: (1) sell the asset in your GIA; (2) realise gains up to the £3,000 annual exempt amount (£3,000 of gains pay no CGT); (3) repurchase inside the ISA — same or different asset, no waiting period required when buying inside an ISA. The 30-day "bed-and-breakfasting" rule applies to GIA-to-GIA repurchases, not to GIA-to-ISA. You can bed-and-ISA up to £20,000 of GIA per year using the full ISA allowance.

What bed-and-ISA actually does

The procedure is simple in concept:

  1. You own some shares or ETFs in a taxable General Investment Account (GIA)
  2. You sell them in the GIA — this is a CGT disposal
  3. The cash now sits in your account (briefly)
  4. You use the cash to buy the same shares/ETFs inside your ISA
  5. Going forward, all dividends and capital gains on those shares are tax-free

The total economic position is unchanged — you still own the same shares with the same value — but the tax wrapper has changed from taxable to sheltered. Over decades, this saves significant tax.

Why "bed-and-ISA"Historical term from the days when you could sell and rebuy a share for tax purposes overnight ("bed-and-breakfast"). HMRC closed that loophole in 1998 by introducing the 30-day rule for GIA-to-GIA repurchases. But you can still effectively do the same thing by repurchasing inside an ISA — hence "bed-and-ISA".

The £3,000 AEA budget

The annual CGT exempt amount is £3,000 for 2026/27 (down from £12,300 in 2022/23). Every individual gets one £3,000 AEA per tax year — couples have £6,000 combined.

Tax yearAEA
2022/23£12,300
2023/24£6,000
2024/25 onwards£3,000

The AEA is the gain you can realise without paying CGT. Critically: it's the gain, not the proceeds. You can sell £100,000 of GIA with £3,000 of gain (i.e. mostly your original cost basis) and pay zero CGT.

How much GIA can you bed-and-ISA each year?

Two constraints:

  1. The £20,000 ISA annual allowance — caps how much can move to ISA per year
  2. The £3,000 CGT AEA — caps the realised gain before CGT applies

The £20,000 limit caps the deal size; the £3,000 limit caps the gain ratio. If your GIA holdings have grown a lot, you may not be able to bed-and-ISA the full £20,000 without triggering CGT.

Worked example 1: low gain ratio (easy)

You hold £40,000 of VWRL in GIA, cost basis £36,000. Unrealised gain £4,000 across the whole holding.

  • Sell £20,000 worth of VWRL (half the holding)
  • Proportional gain on this sale: £4,000 × (£20,000 / £40,000) = £2,000
  • Within £3,000 AEA → no CGT
  • Buy £20,000 of VWRL inside ISA
  • Result: £20,000 migrated to ISA, no tax. Repeat next year.

Worked example 2: high gain ratio (constrained)

You hold £30,000 of CSPX in GIA, cost basis £18,000. Unrealised gain £12,000 across the holding.

  • Gain ratio: £12,000 / £30,000 = 40%
  • To stay within £3,000 AEA, you can sell up to £3,000 / 40% = £7,500
  • Sell £7,500 of CSPX → gain £3,000 → within AEA, zero CGT
  • Buy £7,500 of CSPX inside ISA
  • You've used your ISA allowance partially. Save the rest for next year, or use it for other purposes.

Step-by-step process

Step 1: Check your ISA allowance is availableYou can only use the £20,000 once per tax year. If you've already contributed elsewhere, you're constrained.
Step 2: Identify the right holding to bed-and-ISAPrioritise: (a) the same asset you want long-term — minimal portfolio change; (b) lower gain ratios first — easier to fit within £3,000 AEA.
Step 3: Calculate the safe sale amountSale amount that produces £3,000 of gain = £3,000 / gain ratio. So a holding 20% in the money allows £15,000 of sale within AEA.
Step 4: Execute the sale in GIATrade the sale on your broker's GIA. Cash settles in 1-2 working days.
Step 5: Transfer cash to ISA (if needed)If your broker has separate GIA and ISA accounts, transfer the cash between them. Some brokers (e.g. AJ Bell, II) have a dedicated "Bed and ISA" function that does this seamlessly in a single transaction.
Step 6: Buy the asset inside ISASame ticker — no waiting period for ISA repurchase. The 30-day bed-and-breakfasting rule only applies to repurchases within the same wrapper.
Step 7: Record for Self Assessment if neededIf you're required to file Self Assessment (proceeds over £50,000 OR gain over £3,000), declare the gain on SA108. Even within AEA, large proceeds may require reporting.

The 30-day rule — does NOT apply to bed-and-ISA

HMRC's "bed-and-breakfasting" rule (under TCGA 1992 Section 105) states that if you sell shares and rebuy the same shares within 30 days in the same wrapper, the purchase is matched to the sale for CGT purposes — defeating the loss.

The rule applies to GIA-to-GIA repurchases.It does NOT apply when the repurchase is in a different wrapper (ISA, SIPP). So bed-and-ISA legitimately circumvents the rule — confirmed by HMRC guidance.
Where the 30-day rule does biteIf you sell to crystallise a loss in GIA (e.g. for tax-loss harvesting) and then want to rebuy the same asset, you must wait 31 days OR buy a similar but different asset. Otherwise the loss is disallowed.

Spousal bed-and-ISA — doubling the AEA

The marriage bonusUK married couples and civil partners can transfer assets between them with no CGT (Section 58 TCGA 1992). If your spouse has unused AEA and ISA allowance, you can: 1. Transfer some of your GIA holdings to your spouse (no CGT) 2. Your spouse sells in their GIA using their £3,000 AEA 3. Your spouse buys inside their ISA using their £20,000 allowance 4. Net effect: £6,000 of AEA used + £40,000 of ISA filled per year

Over 4-5 years, this can migrate £100,000+ of GIA into ISAs entirely tax-free. The biggest tax-planning tool most UK couples don't use.

Common mistakes

Mistake 1: Forgetting the £20,000 ISA cap.The total ISA contribution per year is £20,000 across all your ISAs. If you've already contributed to a Cash ISA, your bed-and-ISA capacity is reduced.
Mistake 2: Using the AEA on bed-and-ISA when you have larger losses to offset elsewhere.If you have a £5,000 loss on a stock you want to sell anyway, that loss could offset the bed-and-ISA gain — letting you migrate more in one go. Plan the year holistically.
Mistake 3: Triggering loss disallowance by rebuying outside ISA within 30 days.If part of your reorganisation involves crystallising a loss, the 30-day rule applies. Buy inside ISA (no waiting period), or wait 31 days for outside-ISA repurchase.
Mistake 4: Bed-and-ISA-ing the wrong assets.Prioritise assets that produce regular taxable income or have high growth potential. Don't bed-and-ISA a low-growth bond fund when you have a high-growth equity ETF in GIA. The ISA shelter is more valuable for higher-return assets.
Mistake 5: Not reporting on Self Assessment when required.Even within the £3,000 AEA, if your total proceeds exceed 4× AEA (£12,000), you must report on SA108. Penalties apply for missing this.

Calculate your CGT exposure

The CGT page shows the 2026/27 rates, allowances and how disposal taxes are calculated across the income bands.

Open the CGT guide →

Sources and references

Bed-and-ISA mechanic from gov.uk ISA rules. 30-day rule from HMRC Capital Gains Manual CG51560. Spousal transfer rules from CG22000 onwards. CGT 60-day property reporting requirement from gov.uk.

UK Tax Drag is not authorised by the Financial Conduct Authority and does not provide regulated financial or tax advice — see the content disclaimer for the full position. There are no affiliate links on this page — provider names are mentioned only to illustrate how different providers handle the same procedure.

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