Are you investing outside an ISA and wondering if there’s a smarter, more tax-efficient way to hold your money?
If so, a Bed and ISA could be a useful tool to consider. It’s a straightforward strategy that can help reduce your Capital Gains Tax (CGT) while keeping your long-term plans on track.
What is a Bed and ISA?
A Bed and ISA is a way of moving investments you already own into an ISA, where future growth and income are free from Capital Gains Tax and Income Tax.
Bed and ISA involves selling investments held outside an ISA and then immediately buying them back within the ISA. This allows investors to take advantage of the ISA's tax-free status, while still holding onto the same investments
Why might this matter to you?
Many people build up investments over time outside an ISA. As those investments grow, so does the potential tax bill when you come to sell.
For the 2025/26 tax year, the Capital Gains Tax allowance is £3,000. Any gains above this could be taxed.
What should you be aware of?
While Bed and ISA can be very effective, there are a few things to keep in mind:
ISA allowance limits
You can invest up to £20,000 per tax year (2025/26). If you have a larger portfolio, this may need to be done over several years.
Costs and charges
Selling and buying investments can involve trading fees and bid-offer spreads. These costs need to be weighed against the potential tax savings.
Timing and planning
Good planning is key. Using your CGT allowance effectively and spreading investments over tax years can help maximise the benefit. This is where clear advice can really help remove the stress and uncertainty.
Is Bed and ISA right for you?
A Bed and ISA isn’t about chasing quick wins. It’s about long-term planning, keeping more of what you earn, and building confidence in your financial future.
If you’re looking to make your money work harder while still enjoying life today, it’s well worth exploring.
To find out more about managing your investments tax-efficiently, speak to your Financial Adviser or book a no-obligation meeting to see how this could fit into your wider financial plan.
