"Bed and ISA" and "bed and spouse" are the two working descendants of a neutralised technique: selling shares to use your capital gains tax exemption, then getting the same investment back. The original version — sell today, buy back tomorrow — stopped working in 1998 when the 30-day matching rule arrived: not illegal, just pointless, because the sale is matched to the repurchase and no gain crystallises. The versions that survive route the repurchase somewhere the matching rules cannot follow: into an ISA, or to your spouse. With the CGT annual exemption now a slender £3,000 and rates at 18% and 24%, these small annual manoeuvres are among the few pieces of investor tax planning still worth the paperwork.
The rule being navigated: 30-day matching
When you sell shares, the tax computation must decide which shares you sold. The statutory order: same-day acquisitions first, then — the anti-avoidance heart — any acquisition of the same share within 30 days after the disposal, and only then your long-held pooled holding. Sell and rebuy within the month and the sale is matched to the repurchase, not the pool: cost roughly equals proceeds, no gain crystallises, and the exercise achieved nothing. That is the trap. Both techniques work because the 30-day rule matches only purchases by the same person in the same capacity — and an ISA is a different capacity, a spouse a different person.
Bed and ISA: the standard annual move
Sell shares held in your general investment account, and repurchase them inside your ISA (most platforms run it as one instruction). The sale crystallises a gain — sized, ideally, to use the £3,000 annual exemption — and the buy-back happens where the matching rules cannot see it and where all future growth and dividends are tax-free forever. Costs are modest: the spread, dealing fees, and stamp duty on the repurchase.
Run annually, the compounding is quiet but real: £3,000 of gain washed each year avoids up to £720 of CGT (at the 24% rate, assuming the gain would otherwise eventually be taxed there — dealing costs and spreads nibble at the edge), while steadily migrating the portfolio into a wrapper that never appears on a tax return again. The constraint is the £20,000 ISA allowance — bed-and-ISA consumes it — and one planning note for the cash-heavy: from April 2027 the cash-ISA portion is capped at £12,000 for under-65s while the overall £20,000 survives for investments, a change that if anything strengthens the case for filling the allowance with shares. The same logic works into a pension — "bed and SIPP" — with tax relief on the contribution as a bonus, at the price of locking the money to retirement age.
Bed and spouse: the household version
Here you sell, and your spouse or civil partner buys the same investment in the market with their own funds. Your disposal stands — the 30-day rule does not reach a different person's purchase — your gain uses your exemption, and the household still holds the position, now in the other name with a fresh, higher base cost and access to a second £3,000 exemption on the eventual sale.
The discipline that keeps it legitimate: the spouse must genuinely and beneficially own the new shares, bought with their money, held in their account, at their risk. A pre-arranged circle — sell to the market, spouse buys, spouse transfers straight back — invites challenge as a settlement with no substance. Note also what this is not: a direct transfer of shares to a spouse is a no-gain-no-loss transaction that crystallises nothing; the technique requires a real market sale and a real market purchase, which is exactly why it survives scrutiny when done properly.
Using the machinery well
The annual sequence we run with clients each spring: review unrealised gains before 5 April; harvest up to the exemption via bed-and-ISA (or bed-and-SIPP where pension headroom exists); use bed-and-spouse where the ISA allowance is already full or the amounts are larger; and remember losses — a sale at a loss followed by an ISA repurchase banks the loss for offset while keeping the position, the same mechanics in reverse. Watch the details that catch people: the exemption does not carry forward (use it or lose it each year); the matching rules bite only on securities of the same class — so the "sell this S&P tracker, buy that near-identical one from a different manager" variant avoids the 30-day rule without any wrapper at all, at the cost of a day or two of tracking difference (unit-class switches within the same fund have their own rules and are not a reliable route); and every disposal still needs reporting once proceeds or gains cross the return thresholds.
None of this is aggressive planning — it is the allowance system used as designed, and HMRC's own guidance describes the capacity rules that make it work. It simply requires doing, every year, before the deadline rather than after. Our CGT planning team folds the annual harvest into clients' year-end reviews alongside the broader tax planning cycle — and for portfolios where the gains have outgrown the annual exemption entirely, that bigger conversation (phased disposals, spousal transfers before sales, EIS deferral) is the one to book.