Archived article: This article was correct at the time of publishing. Tax, investments and pension rules can change over time so the information below may not be current.

The easy way to use your ISA allowance without investing any new money

As the tax year-end deadline fast approaches, many people are looking to use up their annual ISA allowance before it resets on 6 April. But not everyone has £15,240 of new money to invest. If you’d like to use this valuable allowance but you don’t have a lot of spare cash, you could consider a Bed and ISA transaction.

What is a Bed and ISA?

Bed and ISA transactions involve selling your non-ISA investments and using the proceeds to open or top up an ISA account. You can then buy the same investments back, choose other investments or simply hold the cash within your ISA. Whichever you decide, you will secure your annual ISA allowance without investing any new money.

The tax benefits

The main reason to use your ISA allowance before it resets is to take advantage of the great tax benefits that ISAs give you. In an ISA, any interest from cash savings or investment gains you make are free from Income Tax and Capital Gains Tax.

Bed and ISA transactions also give you a chance to use your annual Capital Gains Tax allowance. This year you have an £11,100 allowance for capital gains – so when you first sell your investments, any gains you make could be covered. Like your ISA allowance, the Capital Gains Tax allowance can’t be carried over from one year to the next. So if you don’t use it, you lose it.

How to get started with a Bed and ISA

If you already invest with Bestinvest you can log in and sell the investments in your investment account, making sure you don’t go over the £15,240 ISA allowance. Once the cash is in your account, call our team on 020 7189 2400 and ask them to transfer the cash from your investment account into your ISA. After this you can buy back the same investments or choose new ones.  

If you don’t have an ISA with Bestinvest, you’ll need to open one first. After this, call our experts on 020 7189 2400 and they will help you to transfer your cash or investments.

Not sure which investments are best for your ISA?

If you need some inspiration for your ISA investments, why not download a free copy of our top ISA investment ideas? You’ll find a collection of our research team’s best ideas from different sectors across the globe, plus a really easy way to have your investments looked after by our experts.