PI Accountancy & Financial Services

Call: 01923 227767Email: piaccy@aol.com


Bed and breakfast – the same day rule
10/06/2021

Historically, the term bed and breakfasting (sale and repurchase) of shares referred to transactions where shares were sold and then bought back the next morning. This used to have Capital Gains Tax (CGT) benefits by crystallising a gain or a loss but is no longer tax effective over such a short period. The change to the rule occurred in 1998 when new legislation introduced special share matching rules. Under these rules there are limitations including a 30-day waiting period before the shares can be repurchased again.

However, it is possible, under certain circumstances, to use a modified bed and breakfasting type of arrangement to sell an asset only to buy it back again a short time later. A gain could be created to use the annual exempt amount, or a non-resident may bed and breakfast their chargeable assets to establish a higher base cost before they enter the UK tax regime.

Proper advice should be taken before undertaking such transactions to ensure that all tax aspects have been considered. For example, for any bed and breakfast transaction to be effective, there must be a genuine transfer of beneficial ownership of the asset and the share matching rules must be met.


Contact us

Pitax House, 33 Baldwins Lane
Croxley Green, Rickmansworth
Hertfordshire
WD3 3LS

01923 227767
 
EmailThis email address is being protected from spambots. You need JavaScript enabled to view it.
Website: www.piaccountancy.co.uk

Membership

Newsletter Sign up

With our newsletter, you automatically receive our latest news by  e-mail and get access to the archive including advanced search options!

Newsletter Sign up  |  Login

Newsfeed Search