The original “bed and breakfasting” \u2014 selling shares on Friday and rebuying on Monday to crystallise a loss \u2014 has been dead since 1998. But there are perfectly legal variations that can genuinely reduce your CGT bill. The most popular is “bed and ISA”.<\/p>\n
The idea is simple: sell shares in your taxable General Investment Account (GIA), then immediately repurchase the same shares inside your Stocks and Shares ISA. The sale triggers a disposal for CGT purposes, but any future growth happens within the ISA \u2014 completely tax-free.<\/p>\n
The mechanics:<\/p>\n
1.<\/strong> Sell shares in your GIA. This is a disposal \u2014 calculate the gain or loss using normal HMRC matching rules.<\/p>\n 2.<\/strong> Transfer the cash to your ISA (or use existing ISA allowance).<\/p>\n 3.<\/strong> Repurchase the same shares inside the ISA.<\/p>\n The 30-day bed and breakfast rule does not<\/em> apply here. That rule only catches repurchases in the same capacity \u2014 buying back in your GIA within 30 days. An ISA is a different wrapper, so the matching rules treat the ISA purchase as a completely separate holding.<\/p>\n Some platforms (Trading 212, for example) offer a one-click “move to ISA” feature that automates this. Others require you to do the sell and rebuy manually.<\/p>\n Bed and ISA works best when:<\/p>\n Your shares have a relatively small gain<\/strong> \u2014 ideally within or close to your \u00a33,000 annual exemption. You crystallise a small taxable event now to protect all future growth.<\/p>\n Your shares are sitting at a loss<\/strong>. You crystallise the loss (which you can carry forward to offset future gains), then repurchase inside the ISA where future growth is sheltered.<\/p>\n You have unused ISA allowance<\/strong>. The annual limit is \u00a320,000 for 2025\/26.<\/p>\n It’s less attractive if your shares have a very large unrealised gain, because crystallising it all at once could push you into the higher CGT rate.<\/p>\n Emma holds 500 shares of VWRL in her GIA. She bought them at \u00a380 each (total cost \u00a340,000). They’re now worth \u00a392 each (total value \u00a346,000).<\/p>\n She sells all 500 in her GIA: gain = \u00a346,000 \u2212 \u00a340,000 = \u00a36,000.<\/p>\n After the \u00a33,000 annual exemption: taxable gain = \u00a33,000.<\/p>\n At 18% (basic rate): CGT due = \u00a3540.<\/p>\n She immediately buys 500 VWRL shares inside her ISA at \u00a392 each.<\/p>\n Result: Emma paid \u00a3540 in CGT now, but all future growth on those shares is completely tax-free. If VWRL grows to \u00a3120 per share, she’ll have a paper gain of \u00a314,000 \u2014 zero tax. Without the bed and ISA, that \u00a314,000 gain would eventually cost her \u00a31,980 in CGT (at 18%) or \u00a32,640 (at 24%).<\/p>\n Similar principle, different wrapper. You transfer shares to your spouse (which happens at “no gain, no loss” under HMRC rules), and your spouse sells them. This works when:<\/p>\n Your spouse has unused annual exemption (\u00a33,000).<\/p>\n Your spouse is in a lower tax band than you.<\/p>\n Your spouse has capital losses to offset.<\/p>\n The key requirement: the transfer must be genuine. Your spouse must actually own the shares \u2014 you can’t just run the proceeds through their name. HMRC can (and does) challenge artificial arrangements.<\/p>\n Market risk:<\/strong> Between selling and rebuying, the share price might move. If it shoots up, you buy back at a higher price. Some platforms offer near-instant bed and ISA to minimise this window.<\/p>\n ISA allowance limit:<\/strong> You can only put \u00a320,000 per year into ISAs. If the shares are worth more than your remaining allowance, you’ll need to split the bed and ISA across multiple tax years.<\/p>\n Transaction costs:<\/strong> Selling and rebuying costs fees. Factor this into your calculation \u2014 a \u00a310 saving in future CGT isn’t worth \u00a325 in trading fees.<\/p>\nWhen it makes sense<\/h2>\n
Worked example<\/h2>\n
Bed and Spouse<\/h2>\n
Risks and things to watch<\/h2>\n