What is Bed and ISA?
Bed and ISA is a straightforward way to fund your ISA using your existing investments. You sell the stocks and shares you hold in your Trading Account, then buy them back within your ISA. It means you get to take advantage of the tax-efficient benefits of an ISA for your investments.
Bed and ISA benefits
- There is no additional tax to pay on capital gains, most dividends or interest you make once you have transferred your investments into an ISA
- You do not need to use cash to take advantage of your £20,000 annual ISA allowance, as you can use existing taxable investments instead
- We do not charge commission on the sale of assets in your Trading Account
Why Bed and ISA with us?
- Simple online process
- Open an ISA for no additional fee
- Benefit from our great value, choice and expertise
How to Bed and ISA your investments
- We sell your investment holdings in your Trading Account
- We use the money to buy back the same investments within your ISA
- We do both trades at the same time to limit potential share price movement*
- All Bed and ISA instructions will be executed as soon as practically possible
How Bed and ISA works
Log in to your Trading Account and choose Bed and ISA from the cash & transfers menu.
Select your accounts, check your remaining ISA subscription, look up your existing holdings and complete the form.
Preview and submit your instructions, then leave the rest to us.
*When buying the shares back within the ISA, there will be a small price difference because of the bid-offer spread. Because of this, purchase fees and stamp duty, you will buy back a slightly smaller number of shares. Please note, if your holding is in a small-cap or AIM share, we may be able to secure a lower bid-offer spread by dealing it directly than by making an online trade. Please call us to discuss.
Bed and ISA costs
- No commission is charged on the sale of stocks, but repurchase costs apply
- For online requests, your online commission rate is charged on the repurchase of stocks within your ISA
- For telephone and postal requests, the telephone trade commission rate is charged on the repurchase in your ISA
- Government stamp duty of 0.5% also applies to the repurchase of all UK registered stocks
Bed and ISA tax rules
When you sell your existing investments outside a tax-efficient account, they may be subject to capital gains tax (CGT). However, each investor has an annual CGT allowance - currently £12,000 for this tax year. Transferring your investments from a Trading Account into an ISA will mean the investments are no longer eligible for further tax on capital gains, most dividends (dividends on international stocks may be subject to withholding tax) or interest gained. Stamp duty of 0.5% applies to the repurchase of UK stocks.
Understanding the risks
The value of your investments and the income derived from them can go down as well as up and you may not get back all the money you put in. The tax treatment of this product depends on your individual circumstances.
An award-winning ISA
Transfer to us and benefit from an award-winning service at the low price of just £9.99 per month. In return, you will enjoy access to our full range of services, news and insight, as well as £7.99 free credit each month to use against any trade. We are proud to have been named Best ISA Provider at the 2019 City of London Wealth Management Awards.