Bed and ISA: Does the 30-Day Rule Apply? (2026/27)

What Is a "Bed and ISA"?

A Bed and ISA is a two-step manoeuvre. You sell investments held in a taxable General Investment Account (GIA), then use the proceeds to buy the same investments back inside a Stocks & Shares ISA. The name is a relic of the old "Bed and Breakfast" trade — but unlike that strategy, the Bed and ISA has no 30-day restriction.

The result: your portfolio is unchanged, but all future gains, dividends, and interest generated by those holdings are now sheltered inside a tax-free wrapper permanently.

Why the 30-Day Rule Does Not Apply

This is the most common misconception. HMRC's 30-day matching rule (sometimes called the "Bed and Breakfast rule") prevents investors from selling shares and buying them back within 30 days purely to crystallise a loss or rebase their cost. Under TCGA 1992 and HMRC's guidance at CG51560, the rule only matches repurchases made by the same person in the same capacity.

An ISA is a different legal capacity. When you buy shares inside an ISA, the purchase is held by the ISA manager as nominee — it is explicitly excluded from the share-matching rules. You can therefore sell on Monday morning and rebuy inside your ISA on Monday afternoon with no tax consequence beyond the gain on the original sale itself.

The Tax Arithmetic

Consider an investor who holds £15,000 worth of shares originally bought for £10,000. Their paper gain is £5,000.

On selling, £3,000 of that gain is covered by the annual Capital Gains Tax exemption, leaving £2,000 taxable. A basic-rate taxpayer pays 18% on that amount — a CGT bill of £360. A higher-rate taxpayer pays 24% — a bill of £480. For the full rules on rates, Section 104 pooling and reporting, see our guide to CGT on shares.

That one-off cost is typically worth paying. Once those shares sit inside the ISA, they will never face CGT or dividend tax again. A single £5,000 gain inside an ISA over a decade, compounding at 7%, saves a higher-rate taxpayer well over £2,000 in future CGT alone.

The Cost of the Move: Stamp Duty

When you rebuy UK-listed shares inside the ISA, you pay Stamp Duty Reserve Tax (SDRT) at 0.5% on the purchase value. On a £15,000 repurchase, that is £75.

Note: SDRT does not apply to purchases of exchange-traded funds (ETFs) domiciled overseas (such as Irish-domiciled Vanguard or iShares funds), nor to gilts. If your portfolio is primarily composed of ETFs rather than individual UK equities, your transaction cost is simply the dealing spread plus any platform fee.

How to Execute a Bed and ISA

Most major investment platforms (Hargreaves Lansdown, AJ Bell, Interactive Investor, Vanguard UK) now offer a "Bed and ISA" service that bundles the sale and ISA repurchase in a single instruction, reducing the risk of the market moving between the two legs.

If your platform does not offer this, the manual steps are:

1. Sell your chosen holdings in your GIA. Settlement typically takes 2 business days (T+2).
2. Once funds settle, transfer or subscribe cash into your Stocks & Shares ISA (subject to your remaining annual allowance).
3. Repurchase the same holdings inside the ISA.

Timing matters. Your ISA allowance of £20,000 resets on 6 April each year. To use this tax year's allowance, the subscription must reach the ISA by 5 April 2027. If your holdings exceed £20,000, you may be able to spread the move across two tax years — selling in March and completing the ISA purchase with this year's allowance, then restarting the process in April with the new year's allowance.

When Bed and ISA Makes Less Sense

The strategy is most powerful when your unrealised gains are large and your holdings are intended to be held long-term inside the ISA. It makes less sense when:

• You have already used all of your £20,000 ISA allowance this tax year.
• The shares are sitting at a loss — in that case, a straightforward sale to crystallise the loss may be more useful (subject to the 30-day rule if you wish to rebuy outside an ISA).
• The total CGT crystallised, minus the annual exemption, would push you into the higher-rate band, making the tax cost disproportionate to the long-term benefit.

In all cases, use the Shares CGT Calculator below to model your exact gain before deciding.