The dates of the "Bed and ISA" deadline are set by the major investment platforms

The deadline for "Bed & ISA" differs depending on the provider

A summary of the important dates on the main investment platforms is shared by us.

By shifting your investments into an individual savings account (ISA), which is a tax-free wrapper, a "Bed & ISA" transfer can help you hide more of your income and capital gains from the tax man. Although the name is odd, the transaction is helpful.

The "Bed & ISA" deadline is typically a few days prior to the end of the tax year because transferring your investments inside an ISA requires selling them on the open market before buying them back.

If you wish to benefit from this tax-saving measure before the fiscal year ends on April 5th, time is running out. We compile a list of the deadlines for the main UK investment platforms.

ISA and bed deadlines.

Note: You might have to handle the buying and selling process yourself in some situations, but in others, investment platforms can handle it for you. It is worthwhile to investigate your platform's strategy as soon as possible so that you have enough time before the tax year ends to comprehend what is involved.

"Bed & ISA": What is it?

As previously mentioned, a "Bed & ISA" transaction entails moving current assets from a regular account into an ISA wrapper, which will shield any future income or capital growth from taxes.

The process entails selling the initial investments and then purchasing them back because it is not possible to move the assets directly. On your behalf, a provider can handle this.

If you have already gone over your 3,000 annual capital gains allowance, you might be required to pay capital gains tax when you sell the assets. Nevertheless, once the investments are within the ISA wrapper, they will be shielded from future taxes.

If you sell your assets gradually and realize gains in installments, you may even be able to completely avoid capital gains taxas long as you keep the gains below £3,000.

Just keep in mind that completing a "Bed & ISA" transaction depletes a portion of your 20,000 ISA allotment each year.

Investment platform Hargreaves Lansdown's head of personal finance, Sarah Coles, stated that the name is extremely confusing because it doesn't really mean anything. She explains that it is the legacy of a "Bed & Breakfast" strategy that investors once had access to.

As a result, you were able to sell your shares one day and bank gains that were just below the year's capital gains tax threshold, then buy them back the days after. You save capital gains tax because it essentially resets your capital gain to zero," Coles continued.

"This was prohibited in 1998, but if you sell and buy back within an ISA, there is an exception.

"Bed & ISA": is it worth it?

Using "Bed & ISA" transactions, an investor with 200,000 assets could potentially save £15,000 over ten years, according to analysis from investment platform Vanguard. "How Bed & ISA could save you 15,000 over a decade" explains the analysis in greater detail.

Placing your investments in an ISA not only shields you from capital gains tax but also eliminates the need for you to pay dividend income taxes. If you're a higher or additional-rate taxpayer, this might be useful because dividends are taxed at a high rate. Dividends are taxed at 8 percent for basic-rate taxpayers, 33 percent for higher-rate taxpayers, and 39 percent for additional-rate taxpayers after you surpass your annual dividend allowance of £500.

Additionally, the tax burden on investors has increased in recent years due to successive governments, so now might be a good time to use a "Bed & ISA" transfer to shield yourself from lower allowances and higher tax rates.

The basic and higher rates of capital gains tax were raised by the current government from 10 and 20 percent to 18 and 24 percent, respectively, in the Autumn Budget. In the meantime, between 2022 and 2024, the previous Conservative government drastically reduced the dividend allowance from 2,000 to 500 and the capital gains allowance from 12,300 to 3,000.

"Anticipated changes to the CGT regime in the Autumn Budget sparked the rush to Bed & ISA earlier than usual in 2024/25," stated Myron Jobson, senior personal finance analyst at investment platform Interactive Investor. "But the truth is that investing in the tax-efficient ISA wrapper is a smart idea at any time.

"Using the ISA's shield against capital gains and dividend taxes should be a priority for investors looking to maximize returns over the long haul, as the capital gains and dividend tax allowances are less generous than they were in recent history," he continued.