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19.06.2024

Pros and cons of a Bed and ISA

Nadia Khan DipPFS Cert CII (MP)

Nadia Khan DipPFS Cert CII (MP)

Wren Sterling

Financial Adviser, Mortgage Adviser, Will & Estate Planner, Investment & Wealth Manager, Pension Adviser

A Bed and ISA transfer involves moving investments that you own outside your stocks and shares ISA (for example, in a General Investment Account) into this tax-efficient wrapper.

These assets cannot be transferred directly, so you sell the assets outside the ISA and simultaneously buy the same assets back within the ISA. This pair of transactions mirror one another, so you aren’t exposed to movement in the stock market that may occur in the time between buying and selling.

The aim is to end up with the same portfolio as before, but with everything inside an ISA wrapper. Once the transfer has taken place your investments will be free of tax on any potential growth or returns.

Pros

Use your £3,000 capital gains tax-free allowance where available

Move your money into an account where it can grow free of capital gains and income tax.

Use your £20,000 a year ISA allowance without finding any extra money for savings or investment.

Cons

Trigger a capital gains tax bill if you go over your allowance.

Use up your £20,000 ISA allowance so it cannot be used elsewhere.

In some cases, moving your investments into a pension can be even more tax efficient and suitable for your circumstances, especially if you have a workplace pension and you do not need access for a medium-term goal.

Risk warning

As with all investing, your capital is at risk. The value of your portfolio with can go down as well as up and you may get back less than you invest. Tax treatment depends on your individual circumstances and may be subject to change in the future.

Tax Planning
CGT
ISA investments
Bed and ISA

Nadia Khan DipPFS Cert CII (MP)

Nadia Khan DipPFS Cert CII (MP)

Wren Sterling

Financial Adviser, Mortgage Adviser, Will & Estate Planner, Investment & Wealth Manager, Pension Adviser

I am an Independent Financial and Mortgage Adviser and have worked in Financial Services for over 12 years. During my career I gained experience in assisting both individual and corporate clients.…

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