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bed and isa vs sell and buy inside isa



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The purpose behind bed and ISA is to manage capital gains tax. eg realise a gain using your CG allowance, or perhaps offset other gains with a loss, but you want to retain the stock so rebuy it under your available ISA allowance.    It would be great if you could transfer non ISA equity holdings straight into an ISA, but you can't, so the only way to do it is to sell the stock and repurchase in the ISA wrapper.  Obviously there are advantages to holding shares in ISA regarding CGT and dividends but the advantages of bed and ISA have to be weighed up against cost, how long you want to retain the holding etc etc and as you've pointed out, it can become an expensive process.  Unless you are using your CG allowance and dividend allowance there is usually no point in doing it.  Therefore in practise it is only really a tool for more wealthy investors.

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