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Bed and ISA: what is it and how does it work?

If you have investments in a brokerage account, known as a general, dealing, investment or trading account and want to move them to a tax-efficient one, Bed and ISA is worth considering. 

Bed and ISA is when you sell an investment held in a brokerage account and buy it back in an individual savings account (ISA), such as a stocks and shares ISA. 

We’ll run through what you need to consider when using Bed and ISA and the pros and cons of adopting this approach. 


  • Bed and ISA is when you sell an investment in a brokerage account and buy it back in an ISA. 

  • Bed and ISAs can be useful as they protect your investments from tax in the future. 

  • However, there are pros and cons to consider beforehand. 

  • A financial adviser can help you with your investment strategy and portfolio, as well as ensure you’re using up your annual ISA allowance.  

What is Bed and ISA?  

As mentioned, Bed and ISA is when you sell investments from a brokerage account and immediately buy them back in a stocks and shares ISA, a lifetime ISA or even a junior ISA. 

It’s not possible to transfer stocks from a brokerage account, which may be subject to income tax, dividend tax and capital gains tax (CGT), into an ISA. 

If you wanted to transfer investments, as this isn’t possible, you would have to sell them, pay money into a stocks and shares ISA and then invest it in your chosen assets. 

Bed and ISA is useful as it allows you to protect your income and any future growth from capital gains and income tax. 

You can also use your annual ISA allowance, which is £20,000. 

The lifetime ISA has a lower annual allowance of £4,000, which is part of your overall £20,000 ISA allowance, while the Junior ISA annual allowance is £9,000. 

Where can I use Bed and ISA? 

Bed and ISA can be used across many UK-listed investments that are traded in Sterling, including shares, exchange-traded trusts (ETFs), funds and bonds.  

Investment trusts, such as open-ended investment companies (OEICs) and unit trusts, are not eligible for Bed and ISA.  

Before you plan a Bed and ISA, note that your investment can be lower due to the dealing charge, stamp duty reserve tax (0.5% on most UK shares) and any difference in the buy and sell price. 

However, it can be useful as you’ll only pay one dealing charge instead of two separate fees for selling and repurchasing your investments.  

How does Bed and ISA work? 

You can usually do Bed and ISA through an online investment platform, so you can log in to your account to see if this is an option. 

Then, you’ll sell any investments you choose from your brokerage account and buy them back in your ISA. The process can take up to 10 working days, but it’s worth checking with your investment platform

Before you start the Bed and ISA process, you should note any profits from investments in your brokerage account may be subject to CGT. 

The CGT allowance is £6,000 for the 2023/24 tax year, falling to £3,000 from 6 April 2024.  

What if I want to transfer investment funds or shares listed overseas? 

If you want to transfer investment funds or shares that are listed overseas, you must sell your investments and transfer money to your chosen ISA so you can buy them back. 

However, you’ll pay two dealing charges and other fees for foreign investments.  

What is the 30-day rule? 

A 30-day rule exists, where you must wait 30 days to buy the same investment again to prevent investors from benefitting from ‘bed and breakfasting.’ 

‘Bed and breakfasting’ is when someone sells investments at the end of the tax year, uses the CGT allowance, and buys them when the tax year starts. 

However, the 30-day rule does not apply to Bed and ISA, as your investments would be protected from CGT in the future.  

What are the pros and cons of Bed and ISA? 

Before taking advantage of Bed and ISA, you should consider the advantages and disadvantages. 

The pros of Bed and ISA: 

  • A single dealing charge: Both transactions are seen as one, so you’re only charged one dealing rate instead of being charged to buy and sell your investments

  • Your investments are protected from tax: Once your investments are held in your ISA, they are protected from income tax, CGT and dividend tax.  

The cons of Bed and ISA:  

  • You may have to pay CGT: When your investments are sold from your brokerage account, you may have to pay CGT if this exceeds your annual allowance.  

  • Bed and ISA isn’t fee-free: While you’ll save on dealing charges, you’ll likely have to pay 0.5% stamp duty and the difference between the buying and selling price.  

Need help with your investing goals? 

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About the author
Lisa-Marie Voneshen is a Senior Content Writer at Unbiased. She is an award-winning journalist with nearly a decade of experience writing and editing content across various areas, including personal finance and investing.