“Bed and ISAs” explained: Is it a good investment strategy for you?

You might have heard the term “Bed and ISA”, but do you know what it means?

This odd-sounding phrase is an increasingly popular strategy for investing your money tax-efficiently. Indeed, research published by interactive investor has revealed that Bed and ISA requests rose by 53% in 20231.

Read on to find out why an ISA can be a tax-efficient way to save, how Bed and ISA works, and discover if this approach could benefit you.

Your ISA offers a tax-efficient way to save and invest

An ISA is a tax-efficient savings or investment account – any interest or dividends you receive from an ISA are free from Income Tax and any profits from investments are free of Capital Gains Tax (CGT).

You can add up to £20,000 each tax year (2023/24), either to a single ISA or spread across different types of ISA.

Currently, you can’t pay into multiple ISAs of the same type during a single tax year. However, from 6 April 2024, multiple subscriptions to ISAs of the same type and partial transfers will be allowed.

If you don’t use your full ISA allowance during the tax year, you’ll lose it. So, you might be interested to learn how to make the most of your annual allowance without finding more cash.

Read more: 4 Fabulous reasons to contribute to your ISA this Christmas

How Bed and ISA works

Bed and ISA is an investment strategy that could help you make the most of your full annual ISA allowance.

Stocks and shares held outside an ISA – such as in a General Investment Account (GIA) – may be subject to Income Tax and CGT if they breach certain thresholds:

  • The Annual Exempt Amount for CGT, which is £6,000 for 2023/24 (falling to £3,000 in 2024/25).
  • The Dividend Allowance, which was cut from £2,000 to £1,000 for the 2023/24 tax year and is set to be reduced from £1,000 to £500 on 6 April 2024.

Happily, Bed and ISA allows you to move some of your investments into a Stocks and Shares ISA or a Lifetime ISA (LISA) – or split your investments between both types of ISA – to protect them from tax.

You can’t transfer assets directly into an ISA. So, “Bed and ISA” involves selling the stocks and shares you hold outside your ISA and then buying them back within your ISA.

You end up with the same investments, but they are now held inside your tax-efficient ISA wrapper.

Remember: the ISA allowance still applies. So, you can only carry out a Bed and ISA transaction within your annual £20,000 limit.

Is Bed and ISA right for you?

When deciding whether Bed and ISA is right for you, it might be helpful to weigh up the potential pros and cons of adopting this strategy.


  • Use your full ISA allowance without finding any extra money – by moving your existing investments into an ISA you could take full advantage of your £20,000 annual allowance.
  • Move your money into an account where it can grow free of CGT and Income Tax – any gains or income your investments earn are sheltered from Income Tax and CGT from the point they’re added to the ISA.
  • With less tax to pay, more of your money can be reinvested – which could increase the impact of compounding over time, helping your investments to grow.


  • CGT may be due when you sell your stocks and shares – if the shares you sell have gained more than your Annual Exempt Amount, you may have to pay CGT.
  • Your investments may be exposed to market risk – the value of your shares could change between when you sell them and when you buy them back within your ISA wrapper. This could potentially result in a gain or a loss.
  • You may incur costs and fees when making a Bed and ISA transaction – such as trading fees, administration fees, Stamp Duty, and transfer fees.

At Aspira, we can help you understand how Bed and ISA could aid your financial plan and explore whether it’s a good option for you.

Get in touch

If you’d like to know more about how Bed and ISA could help you improve the tax efficiency of your investments, we can help.

Please email us at info@aspirafp.co.uk or call us on 01454 632 495.

Please note

The information contained in this article is based on the opinion of Aspira and does not constitute financial advice or a recommendation for any investment or retirement strategy.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. 

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.



284 - 03 2024

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