Should I do a Bed & ISA?

A reader asked: My wife has shares in Walmart held by Computershare from when she used to work for Asda. We are both now retired. What is the most efficient way of moving all the shares into an ISA over a few years to minimise capital gain tax or any other relevant taxes? By doing a Bed & ISA?

Your wife has shares in Walmart because she participated in the Asda Sharesave Scheme, where employees could save from their pay to buy discounted Walmart stock when Asda was owned by Walmart.

Even after the Issa Brothers and TDR Capital bought a majority stake in Asda in 2020, Walmart retained a 10% share, and existing Asda Sharesave members continued to hold their Walmart shares. Like in your wife’s case, these are often held and managed through Computershare (a platform through which you can view your holdings and sell them).

It is a good idea to move these shares into an ISA, where investments are allowed to grow free of income tax and capital gains tax (CGT). Every UK adult has an ISA allowance of £20,000 a year that they can use to hold cash, investments, or a mix of both. (ISA rules are however changing in April 2027, limiting the amount of cash and cash-like investments that can be held to £12,000 a year).

It seems like the Asda Sharesave Scheme was a Save As You Earn (SAYE) scheme. Typically shares in these schemes can be transferred directly into a stocks and shares ISA without selling them first – but only if this is done within 90 days of acquiring them. The assumption here is that this doesn’t apply in your wife’s case.

This means the most tax efficient way to move all your wife’s share into an ISA is, as you have identified, via the process of Bed & ISA.

Sarah Coles, head of personal finance at Hargreaves Lansdown, explains what Bed & ISA means.“The name is highly confusing, because it doesn’t actually mean anything,” she pointed out.

“Bed & ISA is a hangover from a strategy investors used to be able to use – called Bed & Breakfast. This allowed you to sell your shares one day, and bank gains just below the capital gains tax threshold for the year, and then buy them back the following day. It effectively reset your capital gain to zero, saving you capital gains tax.

“This was outlawed in 1998 – but there’s an exception if you sell and buy back within an ISA.”

Bed & ISA works in two trades. In the first, you sell your stock market investments to realise gains. In the second, you buy them back: the money is reinvested in the same assets within an ISA immediately.

You don’t have to do this as a two-part process, because investment services let you fill in a single form and they handle the practicalities.

Capital gains tax is payable on any profits above a person’s annual allowance – £3,000 for the 2025/26 tax year – but moving the investments to an ISA means you won’t pay capital gains tax on those profits in future.

(It’s also worth remembering spouses can transfer shares between each other CGT-free, which could allow the use of both CGT allowances, so potentially £6,000 total per year.)

Repeating the Bed & ISA process over a number of years – and realising gains only within your CGT annual allowance – can help you significantly reduce your current and future capital gains tax bill.

This is helpful because capital gains tax has simultaneously become more punishing and harder to plan for. Since April 2023, the allowance has been gradually cut from £12,300 to just £3,000, while the 2024 Budget hiked the capital gains tax rate on stocks and shares from 10% to 18% for basic rate taxpayers and 20% to 24% for higher and additional rate taxpayers.

It makes it even more sensible to realise gains as you go along, and the Bed and ISA process means you can do this – while also moving assets into an ISA to protect them from tax in future.