Bed & Breakfast Print

The practice “Bed & Breakfasting” was used to either create a tax loss by selling shares with a high base cost at a loss, and buying them back the following day; or to increase the base cost of a holding by utilising the annual CGT exemption to sell shares with a low base cost and buy them back the following day at their higher current value. The current identification rules prevent Bed and Breakfasting by identifying shares sold with acquisitions within the following 30 days or with shares bought on the same day as the sale.

A form of Bed and Breakfasting is still possible where the sale is carried out by one spouse, say the husband, and a similar holding of shares is then acquired by the wife; or through an ISA. However, in the latter case the amount of the investment may well be limited.

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