A guide to Bed and ISA for the 2025/26 tax year

What is Bed & ISA/Bed & Pension?

Bed & ISA or Bed & Pension (for pension savers) is a process that allows investors to sell investments held in a taxable environment and repurchase them within an ISA or pension. This move effectively shields those assets from income and gains – but care needs to be taken not to breach your annual CGT exemption of £3,000 in the process. Migrating investments into one of these accounts makes a saver’s investment portfolio more tax efficient over the short and long term - a benefit that will become increasingly valuable as allowances remain frozen. Tax treatment depends on individual circumstances and is subject to change. Investments carry risks and you may not get back all you invested.

Read more: Bed & ISA explained | Bed & SIPP explained

Why carry out Bed & ISA/Bed & Pension?

A raft of tax changes in recent years has tightened the squeeze on savers and investors, particularly for those holding assets – such as shares or funds - outside tax-efficient wrappers, leaving many investors feeling increasingly concerned about the tax treatment of their savings and investments.

This is why shifting investments into a tax-efficient Individual Savings Account (ISA) or pension is becoming an increasingly attractive option for many. Thankfully, investors can take advantage of Bed & ISA/Bed & Pension to protect their investments from incurring a tax charge.

How long does it take to complete a Bed & ISA/Bed & Pension transaction?

With only a few weeks until the 2025/26 financial year ends at midnight on April 5, investors that hold assets in a general investment account, or even have share certificates sitting in a drawer at home, must act fast if they want to make the most of their tax-free allowances – particularly if they want to take advantage of a Bed & ISA or Bed & Pension transaction.

The limited time window to complete these transactions is even more pressing this year as tax year end falls over the long Easter weekend. Platforms set early Bed & ISA and Bed & Pension deadlines to ensure sales and transfers are processed in time, but there is an extra Bank Holiday to navigate around for Good Friday on April 3. 

To complete a Bed & ISA process in full, investors typically need up to 10 days, or even up to four weeks, or longer, for those who first need to migrate share certificates on to a nominee account to sell them. Remember, the urgency not only relates to selling the assets and realising the CGT gain but also to utilising your tax-free allowances before the financial year ends. Once the money is loaded into your ISA or pension, however, you can then take your time to make your investment selection.

What are the benefits of a Bed & ISA transaction?

Investment benefits

While selling investments held outside a tax wrapper and buying new assets can be done relatively quickly, those that want to lock in a gain and then repurchase the same shares and funds outside of an ISA must adhere to UK rules that require investors to wait 30 days* to buy back the same investment.

Bed & ISA or Bed & Pension, however, is an exception to that 30-day rule* as the money is being moved into a tax-efficient Stocks & Shares ISA or a private pension, such as a Self-Invested Personal Pension (SIPP), where it will grow tax free. Because the transaction can happen quickly for a digital transfer, the investor should not miss out on major market moves for too long. SIPPs may not be suitable for everyone.

Tax benefits

Many Britons are simply unaware of the tax benefits that come from holding investments in a tax wrapper, such as a Stocks & Shares ISA or a private pension. Many personal tax allowances have either been cut or frozen in recent years, but ISAs and pensions can shield savers' money from any tax on interest, dividends and capital gains, so they are an option for savers to consider if they want to hang onto as much of their wealth as possible. 

Savers have been hit with a barrage of tax changes in recent years. Whether it’s the Autumn Budget 2025 decision to extend the income tax threshold freeze to 2031, the 2-percentage point increase in dividend income tax set to come into effect on April 6, or similar hikes to savings and rental income tax coming online in April 2027, the tax burden on savers and investors is creeping ever higher. 

There's also the already implemented rises to Capital Gains Tax (CGT) rates introduced in October 2024 to contend with (which rose from 10% to 18% for basic-rate taxpayers, and from 20% to 24% for higher and additional rate taxpayers), along with the cuts to the CGT annual exemption** and the Dividend Allowance*** under the former Conservative Government. Plus, the static Personal Savings Allowance**** limits how much savers can hold in cash before they are liable for tax on the interest they earn. 

Taking advantage of your annual £20,000 ISA allowance before tax year end by using Bed & ISA to migrate investments into a tax-efficient account can help make the most of this allowance before it resets on April 6. And remember, your ISA allowance can’t be carried over to the following tax year.

It can also make sense to use up your annual £3,000 CGT exemption, as this allowance also does not roll over to the next year. Sometimes referred to as ‘the forgotten allowance’, the annual CGT exemption often remains unutilised, even by the most experienced investors, who let their exemption expire each tax year end. 

By taking advantage of your ISA allowance every financial year, and by using the Bed & ISA process to complete the transaction – you can make gains gradually, rather than all at once, again enhancing the tax-efficiency of your portfolio. This is why anyone with substantial capital gains on their existing investments, such as shares and funds, held outside a tax wrapper who has some of this tax year’s ISA allowance left could consider carrying out a Bed & ISA transaction – or Bed & Pension for those who want to top up their pension instead – before the financial year ends. Provided the investor does not breach this tax year’s CGT exemption of £3,000 during the process, the transfer won’t incur a tax charge.

Married couples and civil partners can also take advantage of ‘interspousal transfers’ and switch assets between each other without triggering a tax charge. This means they can make use of two sets of allowances as part of their Bed & ISA or Bed & Pension strategy, where the shares of funds were originally held in one of their names. 

The process involves shifting some of the investments to be sold into a partner’s name before selling, to make use of both sets of CGT exemptions. This can be particularly advantageous if one partner pays a lower rate of income tax, as there is also the potential for them to pay a lower rate of CGT if they exceed their £3,000 allowance. Couples can also make use of two sets of ISA or pension allowances – offering even more scope for a couple to ensure their investments are as tax efficient as possible.

FAQ: How to transfer cash or investments to my spouse’s Bestinvest account

What considerations should investors have in mind for a Bed & ISA transaction?

Market movements

A key consideration is the effect of any market movement on the asset price between the period you have sold the asset and when you repurchase it. Once you have sold the asset and are waiting for it to be converted to cash, the price of the asset you are looking to re-purchase could go up before you are able to make the purchase. Of course, the price could also drop. For digitally held assets, the process of selling the asset and transferring to another account can be completed within a matter of days. However, for those holding share certificates, the transaction can take longer.

FAQ: How to transfer in share certificates on Bestinvest

Allowance limits

You should check you have enough annual allowance remaining across all ISA accounts. For the current tax year, the annual ISA allowance is £20,000 which can be spread across different types of ISA accounts – Cash, Stocks & Shares and Lifetime and Innovative ISAs.

As mentioned previously, investors also need to make sure not to breach this tax year’s CGT exemption of £3,000 during the process as you could incur a tax charge if you do.

Dealing fees

With Bestinvest, there is no fee to buy or sell funds online but for UK shares, there is a £4.95 fee per transaction so there will be a charge when you sell and re-purchase the investment. 

Purchases of UK-listed shares (other than those listed on AIM) will incur stamp duty of 0.5%. There will almost always be a buy/sell spread between the sale and purchase price, so you could end up with slightly fewer shares in your ISA than you held previously. 

You should factor in these costs when thinking about this process. See more on our dealing fees.

How to carry out a Bed & ISA transaction before tax year end

Step 1: Open an ISA (if you don’t have one already)

You will need to open an ISA so you can migrate the investments from one account to the other. Investments carry risk, you may get back less than you invested. 

Remember, if you hold shares in certificate form, they must first be transferred to a General Investment Account before they can be sold and the gain crystallised. This process can take up to four weeks, or longer, so it may be too late for this tax year and something to consider next tax year. 

Step 2: Check how much of your tax-free allowance you have left. 

Those who already have a Stocks & Shares ISA in place – or another type of ISA with a different provider - must calculate how much of their £20,000 allowance is remaining.

Step 3: Sell your existing investments held in a general investment account up to the value you want to move into your ISA

Take care not to exceed your current CGT exemption limit of £3,000 in the process. Bear in mind that it can take a little while for the sale of your investments to clear, and the cash becomes available to reinvest.

While you may pay CGT on any profits above your annual allowance, moving the money into an ISA means you won’t have to under current tax rules. Tax treatment depends on individual circumstances and is subject to change.

Step 4: Transfer the money to your ISA

Once the cash is available in your general investment account you can transfer it to your ISA online instantly. 

• Select your account from the main dashboard
• Navigate to the ‘Manage cash’ tab and select the ‘Transfer cash’ option
• Select the ISA account you want to transfer the cash to and how much to transfer

Note: You can only transfer cash from an Investment Account to another Investment Account or to an ISA.

Once the cash has landed in your ISA, you can then buy back the same investments – effectively ending the Bed & ISA journey.
However, if you’re not looking to invest yet, you can also hold the money in cash in your Stocks & Shares ISA. At Bestinvest, cash attracts an interest rate of 2.98% (as of 29 December 2025) - this rate is subject to change and is set by our custodian SEI. 

To carry out a Bed & Pension on Bestinvest, follow the same process as outlined above with one difference.

• For Bed & Pension transactions, you can’t digitally transfer cash from a general investment account to a SIPP. You have to withdraw the cash to your linked bank account and pay it back into your Bestinvest SIPP by debit card or bank transfer.

Don’t miss out on Bed & Pension 

Pension saving can be particularly lucrative for those who don’t need to touch their money until they retire because contributions attract tax relief at the individual’s marginal income tax rate. This allows higher and additional-rate taxpayers to claim an extra 20% and 25% in tax relief respectively – on top of the 20% tax relief awarded to basic rate taxpayers. Plus, any money invested not only benefits from compounding over the long term but also grows free of any income and capital gains tax. Tax treatment depends on individual circumstances and is subject to change.

This is where Bed & Pension can be very useful for those with savings held outside a tax wrapper. Employees can currently contribute up to 100% of relevant UK earnings, subject to the £60,000 Annual Allowance, into their workplace or private pension, a limit that encompasses all contributions across all pension arrangements, tax relief and employer contributions – though the very highest earners are subject to a tapered allowance. 

Topping up a pension before tax year end could be a wise move for some, as retirement savings can nearly always do with a boost. It is important to remember, however, that once the money is added to your pension, it cannot be accessed by the saver until they are 55, or 57 from 2028. Those with sizeable sums they can use for a Bed & Pension transaction can also benefit from carry forward rules, where they mop up any unused annual allowance from the previous three tax years once they have maximised their current allowance for this tax year. This still can’t exceed 100% of your earnings.

What are the key payment deadlines at tax year end for Bestinvest clients?

ISA/Junior ISA deadlines: To open an ISA or complete subscriptions into ISAs this tax year: 11.59 pm on Sunday, April 5, 2026.

Debit card payment deadline for ISAs /SIPPs: Sunday, April 5, 2026, at 11.59pm

Bank transfer: The deadline for ISA contributions is the same as above but beware of unforeseen delays. This tax year end falls on Easter weekend with a Bank holiday on Friday, April 3, so it is advisable to initiate the transfer earlier in the week to ensure the transaction goes through. For SIPPs, bank transfers must be made by Thursday, April 2.

Bed & Pension deadline: Tuesday March 24 at 5pm. You must sell any investments you wish to move from the Investment Account to your SIPP by that date. This is to allow enough time to process the sale and transfer the cash to your Investment Account. Once the cash is available, you will need to withdraw it your linked bank account then pay it into your SIPP by debit card or bank transfer.

Bed & ISA deadline: Friday, March 27 at 5pm. You must sell any investments you wish to move from the Investment Account to your ISA by that date. This is to allow enough time to process the sale and transfer the cash to your Investment Account. Once the cash is available, you can then transfer it into your ISA. If you are looking to Bed & ISA shares that you hold as certificates and are not currently in your online account, then the process will take longer.

For support: Clients can get support by phone, email or speaking to us on webchat. Those who want extra guidance from a Bestinvest coach can book a free investment coaching session with a financial coach here.

*30-day rule: This regulation introduced in the late 1990s to prevent investors from ‘Bed and Breakfasting’ their assets, where they sold investments at the end of the tax year to use up their CGT allowance and then brought them back straight after the start of the new tax year.

**The annual CGT exemption is currently just £3,000 - less than a quarter of the £12,300 available in the 2022-23 tax year.

***The annual tax-free dividend now sits at £500 - just a quarter of the £2,000 allowance investors could tap into in 2022-23 and a brutal 90% reduction from the £5,000 allowance available in 2017-18.

****The Personal Savings Allowance enables basic rate taxpayers to earn the first £1,000 in cash interest free of tax. Those paying the higher 40% income tax rate receive a £500 allowance while additional rate taxpayers subject to 45% income tax receive no concession at all.