Bed and ISA explained: moving existing shares into an ISA

Correct as of 26 September 2026. The ISA and tax rules on this page were last checked against gov.uk on this date. Figures are for the 2026/27 tax year unless a different year is stated.

"Bed and ISA" is the name given to selling shares or funds you hold outside an ISA and buying them back inside a stocks and shares ISA. The idea is to move investments you already own into the tax-free wrapper, because gov.uk rules mean you cannot simply transfer existing shares into an ISA. This guide explains how it works, what it uses of your ISA allowance, and the Capital Gains Tax points to check.

Why you cannot just transfer shares into an ISA

HMRC's guidance for ISA managers says that payments into an ISA must normally be made in cash. Investments you already hold outside an ISA can be sold and the proceeds paid into the ISA, but the shares themselves cannot be moved across. The main exception is shares from an employee share scheme: shares from a Save As You Earn (SAYE) option scheme or a Share Incentive Plan (SIP) can be transferred directly into a stocks and shares ISA within 90 days of leaving the scheme, and their market value on the day counts towards your allowance.

How a bed and ISA works

Sell the shares or fund units in your general (taxable) account.
Pay the cash into your stocks and shares ISA. This counts as a payment towards your £20,000 allowance for 2026/27.
Buy back the same investments (or different ones) inside the ISA.

Some platforms offer this as a single instruction. Others need you to do each step yourself. Either way, the steps are the same, and dealing charges and any difference between the selling and buying prices apply to the sale and the repurchase.

What it uses of your ISA allowance

The cash you pay in is a normal ISA payment. In 2026/27 the overall limit is £20,000 across all your ISAs, so:

If you sell investments worth £15,000 and pay the proceeds into your ISA, you have £5,000 of allowance left for the rest of the year.
Investments worth more than your remaining allowance cannot all be moved in one tax year. People sometimes move part in one tax year and part in the next.
Since 6 April 2024 you can pay into more than one stocks and shares ISA in a year, but the £20,000 total still applies. A Lifetime ISA's own limit is £4,000 within that total.

Capital Gains Tax: the point to check

Selling investments outside an ISA is a disposal for Capital Gains Tax. If your total gains in the tax year, after any losses, are above the annual exempt amount, which is £3,000 for 2026/27, you may have tax to pay on the excess. Once the investments are inside the ISA, gov.uk confirms there is no Capital Gains Tax when you sell them.

Example (illustrative, 2026/27 figures)

You sell shares for a gain of £4,000 and have no other gains or losses this year. The first £3,000 is covered by the annual exempt amount, leaving £1,000 that may be taxable. Whether tax is due, and at what rate, depends on your other income and the type of asset. gov.uk explains how gains on shares are worked out and taxed.

Because a bed and ISA is a sale, some people use it to realise gains gradually, staying within the exempt amount each year. Others have gains too large to avoid tax on. Which position you are in depends on your own figures. gov.uk also has special rules for working out the cost of shares in the same company that you sell and buy back within 30 days, and for pooling shares bought at different prices. HMRC's helpsheet HS284 covers these; if your situation is not straightforward, take advice.

Costs and risks to weigh

Dealing charges on the sale and the repurchase, and any account or platform fees.
Price spread: the buying price of a share is usually slightly higher than the selling price, so you may get back fewer shares than you sold.
Time out of the market: if the sale and repurchase are not on the same day, prices can move between them.
Capital Gains Tax on gains above the exempt amount, as above.
Allowance used: the money paid in is allowance you cannot use for new savings this tax year.

Bed and ISA versus an ISA transfer

A bed and ISA moves investments from a taxable account into an ISA. An ISA transfer moves an existing ISA between providers, and does not use your allowance. They are different processes with different rules: see how to transfer ISA accounts.

Planning the numbers

To see how much allowance you have left before paying proceeds in, use the ISA Allowance Checker. To project how investments might grow once inside the wrapper, try the Stocks and Shares ISA Calculator. For every ISA limit in one place, see ISA rules at a glance, and for the rules on holding several accounts, How many ISAs can I have?

Sources

This article is general information based on gov.uk guidance, not financial or tax advice. It does not compare or recommend platforms. Tax treatment depends on your circumstances and may change.