Budget changes forces ISA customers to Bed & ISA earlier

• Bed & ISA transactions down 40% so far in 2025 (to February 28) year on year
• That’s because many of our customers shifted their assets into ISAs ahead of the changes to CGT announced in the October Budget (rates increased to 18% and 24% for basic and higher-rate taxpayers, respectively)
• Last year, interactive investor recorded its busiest summer and Q3 ever for Bed & ISA transactions amid rampant speculation of a rise in capital gains tax in the 30 October Budget
• interactive investor offers tips of how to make the most of your ISA allowance before the end of the tax year.

The traditional pre-tax year end year rush to shift assets into the tax-efficient ISA wrapper came earlier than usual as investors pre-empted the change to capital gains tax (CGT) in the Autumn Budget.

• Invest with ii: Open an ISA | ISA Investment Ideas | Transfer a Stocks & Shares ISA

Bed & ISA transactions on interactive investor (ii), the UK’s second-largest platform for private investors, fell 40% in Bed & ISA transactions so far in 2025 (to February 28) compared to the same period in 2024.

This follows a record-breaking summer and Q3 for Bed & ISA transactions on interactive investor amid rampant speculation of a rise in capital gains tax in the 30 October Budget.

Bed & ISA transactions on ii were up 44%from 1 July to the end of September 2024, compared to the same period in 2023. Following this, as Budget speculation heightened, ii saw a 49% uptick in Bed & ISA transactions in October 2024 compared to the previous month.

The CGT rates were subsequently increased to 18% and 24% for basic and higher-rate taxpayers, respectively.

Myron Jobson, Senior Personal Finance Analyst atinteractive investor, says: “The rush to Bed & ISA came earlier than usual, spurred on by anticipated changes to the CGT regime in the Autumn Budget. But the reality is that anytime is a good time to shelter investments within the tax-efficient ISA wrapper. With the capital gains and dividend tax allowance less generous than they were in recent history, making full use of the ISA’s shield against capital gains and dividend taxes should be a priority for investors looking to maximise returns over the long haul.”

How Bed & ISA works

Bed & ISA involves transferring assets held outside a tax wrapper into an ISA, so that future investment growth and income is sheltered from tax. It can also be a useful way to take advantage of any unused ISA allowance, especially if an investor has less ‘new’ money to invest.

Customers will pay a trading fee on the re-purchase, not the sale. This means it’s far cheaper to Bed & ISA than to sell your investments yourself, transfer your cash into your ISA, and then repurchase the shares.

Customers will also pay stamp duty and market spread costs. Capital gains tax is payable on any profits above a person’s annual allowance, but moving the investments to an ISA means you won't pay capital gains tax on those profits in future.

Myron Jobson says: “Bed & ISA is a nifty way to use more of your tax-free ISA allowance before the end of the tax year, without using any new money. So, if you have some spare ISA allowance to use before the end of the current tax year – and remember it is ‘use it or lose it’ – moving them into an ISA means you’ll save more.”

Only a quarter of adults are aware of tax year end ‘use it or lose it’ allowance deadline

Recent research by ii revealed that just over a quarter (28%) of adults were aware that tax year end is a deadline to make the most of tax-free allowances for the current tax year, with 17% saying they have no idea what the term means, and a further 13% believing it only applies to wealthy people.

The research forms part of the launch of a new campaign from ii, “Tax Year Zen”, which aims to better understand the negative emotions and associations that people have when it comes to managing their investments, and to empower savers – providing them with the knowledge and tools to make their money go further through tax efficiency.

Camilla Esmund, Senior Manager at interactive investor, explains: “As we move towards tax year end, there are still plenty of things you can do to make your money work harder for you. Shielding your investments in a tax-efficient wrapper is one of the easiest ways to do this to. ISAs and SIPPs can be brilliant tools to grow your wealth, as your income and gains are not subject to tax. So, if you can, it’s wise to use the most of your tax-free allowance, and with the end of the tax year on 5 April if you don’t use it, you lose it.”

Dates for investors’ diaries: ISA and SIPP deadlines

Below, interactive investor, outlines each ISA, Junior ISA, and SIPP deadline to have in your diary. 

interactive investor urges investors to read these deadlines carefully, as there are slight variations on deadline between each type of application.  

For those adding money into an ISA/JISA by bank transfer (as opposed to debit card or internal transfer), the deadline is a day early (4 April).

Bed & ISA application deadlines, for example, have an earlier deadline of five days earlier.

A reminder of annual allowances:

• ISA subscription limit - £20,000
• Junior ISA (JISA) subscription limit - £9,000  
• SIPP Annual Allowance limit - up to £60,000
• SIPP Money Purchase Annual Allowance (MPAA) - £10,000

Dates for your diary – fast-approaching ISA and Junior ISA deadlines

• New ISA applications
  • Deadline:11.30pm, Saturday 5th April1
• New JISA applications 
  • Deadline:11.30pm, Saturday 5th April1
• Add money to your ISA/JISA by debit card 
  • Deadline: 11.30pm, Saturday 5th April2
• Add money to your ISA/JISA by internal transfer
  • Deadline: 11.30pm, Saturday 5th April3                
• Add money to your ISA/JISA by bank transfer
  • Deadline: 11.59pm, Friday 4th April4
• Bed & ISA/JISA instructions
  • Deadline: 4.30pm, Monday 31st March5     

How to make the most of your ISA allowance before the new tax year

Myron Jobson offers tips on how to make the most of your ISA allowance before tax year end.

Maximise your contributions

“If you have spare cash, consider topping up your ISA before the deadline. Even if you can’t reach the full £20,000, every pound sheltered from tax is a win. Stocks and Shares ISAs, in particular, offer long-term growth potential - ideal for those with a longer investment horizon.”

Park cash in a stocks and shares ISA before investing

“If you want to secure this year’s ISA allowance but aren’t quite ready to invest, you can still deposit cash into a Stocks and Shares ISA and decide where to invest later. This way, you lock in the tax-free status before the deadline while giving yourself more time to plan your investment strategy.”

Make use of your partner’s allowance

“Couples can double up on tax-efficient savings by making use of each other’s ISA allowance. That’s a combined £40,000 shielded from tax.”

Think about transferring

“Not happy with your current ISA provider? You can transfer your ISA without losing tax-free benefits. Shop around for things like lower fees and better service, but make sure you follow the official transfer process rather than withdrawing funds, which could eat into your ISA allowance.”

Get ahead for the new tax year

“If you’re in a position to do so, setting up a monthly direct debit into your ISA from April can take the stress out of last-minute contributions. Investing little and often helps smooth out market fluctuations and takes advantage of pound-cost averaging.”

Notes to editors

ISA deadlines

1 Applications with an immediate subscription by debit card as part of the application process will be accepted until this time. The deadline only applies to applications that are accepted immediately online and do not require additional supporting information or verification. Please allow ample time for your application and payment to be completed.

2 Online and Mobile Apps only.

3 Internal transfers between linked accounts only.

4 The deadline for receipt of cleared funds in our bank account. Note, bank transfers can take up to 3 working days to clear from initiation depending on the payment service your bank uses.

5 The deadline for online instructions. Telephone requests will be dealt with on a best endeavours basis after this time. Settlement must occur on or before 5 April to ensure the value is included in 2023/24 subscriptions. Trades requiring longer settlement periods must be traded in good time to be included in your 2023/24 subscriptions.