Home 5 Capital Gains Tax 5 Bed and breakfast share sales
Bed and breakfast share sales

Bed and breakfast share sales

18 January 2024

Selling and repurchasing shares, known as bed and breakfasting, previously had tax benefits, but rule changes limit its effectiveness. Seek advice for tax considerations before attempting such transactions.

In the bed and breakfasting (sale and repurchase) of shares, one sells and buys back shares the next morning. Previously offering Capital Gains Tax (CGT) benefits, a 1998 rule change introduced special share matching rules, limiting its effectiveness. These rules impose constraints, including a 30-day waiting period before shares can be repurchased.

Nevertheless, circumstances may allow a modified bed and breakfasting arrangement, enabling the sale and repurchase of an asset shortly after. This could create a gain to utilize the annual exempt amount. Or non-residents may sale and repurchase chargeable assets to establish a higher base cost before entering the UK tax regime.

Seeking advice before such transactions is crucial to consider all tax aspects. For a bed and breakfast transaction to be effective, one must genuinely transfer beneficial ownership of the asset, meeting the share matching rules.

Source: HM Revenue & Customs Tue, 16 Jan 2024 00:00:00 +0100

You may also like these

Here are some more articles that might interest you

Expert Advice

If you’d like more information on anything you’ve read, we’re here and happy to help