A stocks and shares individual savings account (ISA) can be a really convenient way to invest tax-efficiently. 

But if you have investments held outside of an ISA already, you might be thinking you’ve missed out on the chance to earn tax-free returns.

The good news is that there’s a straightforward way to effectively transfer your investments into your ISA, through a process known as a ‘Bed and ISA’.

Here, we explain what a Bed and ISA is, how it works, and why you might want to think about transferring your current investments into an ISA wrapper.

What is a Bed and ISA?

An ISA is a tax-efficient wrapper where you can save or invest a certain amount of money each year (£20,000 per year in the 2024/25 tax year), without having to pay tax on your returns or declare them on a self-assessment tax return. There are three main types of ISA, cash ISAs, innovative finance ISAs and investment ISAs, also known as stocks and shares ISAs. Learn more about the basics of the different types of ISAs in our article Everything you need to know about ISAs.

A “Bed and ISA” is a service offered by some investment platforms that allows you to sell an investment or multiple investments that you already have in a regular trading account and then to buy them back within an investment ISA wrapper in one process. This way, you retain your investment but get the tax benefits of the ISA as well going forwards.

This can be a smart move particularly if you want to start a stocks and shares ISA but don’t have the cash to invest in one, only investments elsewhere.

How does a Bed and ISA work?

The Bed and ISA process essentially involves an investment provider selling your investments held outside an ISA on your behalf, and then buying them back within an ISA wrapper. 

It saves you from having to request the sale, and then having to transfer the proceeds into your bank account so you can use them to repurchase the investments in an ISA. All you have to do is instruct the provider to make the Bed and ISA transaction on your behalf, and they will complete these three stages for you. 

The amount you move into your ISA can’t exceed your annual allowance of £20,000 (remember to deduct any contributions you might have already made in the current tax year).

This service is offered by most investment platforms that offer both regular trading accounts and investment ISAs. Bed and ISAs will typically require you to hold your existing investment in an account with that provider already, and require that the ISA you transfer your investments to is one of theirs as well. Companies do not typically allow you to transfer to an ISA that you hold elsewhere, or from a trading account that you hold elsewhere. You may still be able to do this yourself without the assistance of a Bed and ISA service.

How much does it cost to use a Bed and ISA?

The main benefit of carrying out a Bed and ISA is the long-term saving you make on tax by holding the investment in an ISA package. Any returns you make on the investment won’t be taxable as long as the investment is within your annual ISA allowance.

However, there are some short-term charges you’ll need to factor in when deciding whether a Bed and ISA is worth it. For starters, you may need to pay capitals gains tax (CGT) when you initially sell your investment, if the gains from the sale exceed your Annual Exempt Allowance (this reduced to £3,000 in 2024/25 from £6,000 the previous tax year). Once the investment is safely within your ISA, you won’t pay CGT if you decide to sell it again. Read more about this form of tax in our article What is Capital Gains Tax and how do I pay it?

There is also a Stamp Duty charge for repurchasing shares, currently charged at a rate of 0.5%.

In addition, while a Bed and ISA is intended to minimise potential investment losses, it is still possible that there will be a difference between the price you sell your investment for and the price at which you buy it back at, due to movements in the market. That means if, for example, your investment goes up in value between selling and buying, you’ll only get back the number of shares that your sales profit can repurchase for you, so you may end up with fewer than you started with.

Your provider may also charge a dealing fee for completing a Bed and ISA, though this tends to be fairly cheap.


If you’re on the fence about opening an investment ISA, or moving investments using Bed and ISA, our guides Should I invest in a cash or a stocks and shares ISA? and 5 things to consider before you invest in a stocks and shares ISA might help. Or, check out our article 5 ways to boost your stocks and shares ISA if you already have an investment ISA. 

Rest Less Money is on Instagram. Check out our account and give us a follow @rest_less_uk_money for all the latest Money News, updated daily.