Bed and ISA: Using Your CGT Allowance Without the 30-Day Rule
Bed and ISA is one instruction. You tell your broker to sell £X of a holding in your General Investment Account and buy the same £X back inside your ISA on the same trading day. Two trades, one button.
People do this for two reasons. To use the £3,000 annual exempt amount before the tax year ends. And to move existing holdings into a wrapper before their growth turns into a bigger tax bill later.
The obvious worry: doesn't HMRC's 30-day "bed and breakfast" rule kill the whole thing? It would, if you rebought in the same GIA. It doesn't catch an ISA rebuy. The reason is buried in two words of legislation.
Why the 30-day rule doesn't catch a Bed and ISA
The rule sits in TCGA 1992 s106A. Sell shares, buy the same shares back within 30 days, and HMRC ignores your Section 104 pool. It matches the sale against the rebuy instead, and your crystallised gain mostly vanishes.
HMRC's manual at CG51560 sets out the test:
"of the same class, acquired by the same person in the same capacity, and acquired within the 30 days after the disposal"
Read that again. "In the same capacity" is the bit that matters. Shares in your GIA belong to you. Shares inside an ISA are held by the ISA manager on your behalf, under the separate ISA regulations. Different legal capacity. The 30-day rule doesn't apply. The same reasoning covers a SIPP, and a transfer to a spouse.
So the GIA disposal stands on its own. The gain is real, it uses your AEA, and the ISA holding starts fresh at the rebuy price.
Worked example
You hold 1,000 shares of an index fund in a GIA. You paid £97 a share, so £97,000 in total. They're trading at £100 today, which means £3,000 of unrealised gain. You tell your broker to Bed and ISA the lot:
| Account | Action | CGT impact |
|---|---|---|
| GIA | Sell 1,000 index-fund shares at £100 | £3,000 gain crystallised, fully covered by your AEA |
| ISA | Buy 1,000 of the same shares at £100 | New cost basis £100,000. Future growth no longer taxable. |
Tax bill: nothing. The £3,000 gain lands exactly inside your AEA. Same fund, same 1,000 shares, same market value — just sitting in an ISA now, where future growth and dividends are out of HMRC's reach.
Why it adds up over the years
The £3,000 AEA resets on 6 April every year. Use it or lose it — there's no carry-forward. If you sit on a large taxable holding and never sell, you're banking unrealised gain that all becomes taxable in one go later.
Doing a Bed and ISA each spring is a way around that. The ISA subscription limit is £20,000 per tax year, so you can shelter up to that much value annually, crystallising up to £3,000 of gain tax-free along the way:
| Scenario | After year 1 | After year 10 (7% p.a.) |
|---|---|---|
| Leave £30,000 in the GIA | No tax saved | ~£29,000 unrealised gain. Sell it then, pay ~£6,240 CGT at the higher rate. |
| Bed and ISA the £30,000 now | £720 saved on the gain you crystallise | Whole holding sheltered. £0 CGT, ever, on the original lump and its growth. |
The CGT rate you avoid is 18% on the basic-rate band and 24% above it. There's also the dividend tax you skip each year once the holding is inside the ISA.
How brokers do it
Hargreaves Lansdown, AJ Bell, Interactive Investor and Trading 212 all have a Bed and ISA option in the platform. One instruction, two trades, same day, usually no extra dealing charge on the ISA side.
A few things worth knowing. You pay the bid-ask spread once on the round trip — pennies for a liquid ETF, meaningful for a small-cap share. You're out of the market for minutes between the legs, sometimes longer if the platform can't execute both trades the same day. The rebuy eats into your annual ISA subscription, so if you've already paid £15,000 into an ISA this tax year you've only got £5,000 of headroom left.
And the move has to be a genuine sale and rebuy. You can't ask the broker to "just shift" the shares between accounts. That wouldn't be a disposal, and triggering the disposal is the whole point.
What can go wrong
The most common mistake is selling more than your AEA can absorb. If your £30,000 holding has £5,000 of unrealised gain and you Bed and ISA the lot, you've crystallised £5,000. Only £3,000 of that is sheltered. The other £2,000 is taxable. Size the sale to the gain you can shelter, not to the position size.
The 30-day rule does still apply inside your GIA. Some people Bed and ISA a holding and then "rebalance" by repurchasing the same stock in their taxable account a few days later, often without thinking. That trips the bed and breakfast match and undoes the AEA crystallisation you just did. If you must hold the position in both wrappers, leave at least 30 days before you top up the GIA.
Brokers get swamped in the last two weeks of the tax year. A few publish a cutoff around 20 March for Bed and ISA instructions. If you're cutting it fine, do it in February.
Bed and SIPP works the same way for people with pension contribution headroom. Same capacity reasoning, different wrapper, different annual allowance rules.
How to report it
The GIA leg is a normal disposal. If your year's gains go over £3,000, or your total disposal proceeds go over £50,000, you'll be on the SA108 capital gains pages anyway — list the sale with the cost basis from your Section 104 pool and the proceeds from the broker contract note. The ISA leg never appears on a tax return.
If you want to size the move accurately — enough to use your AEA, not so much that you spill into taxable gain — our CGT calculator runs the matching rules over your year's trades and shows you exactly which disposals are eating into the allowance.