Suppose I sell some shares near to the end of the last financial year. Suppose I discover that I exceeded the CGT allowance. Suppose that I repurchase some or all of the shares within the x week period (I've forgotten the value of x) within which capitals gains cannot be 'realised'. Suppose that this second date is in this financial year.
Have I now cancelled some or all of the CGT which I would otherwise be required to pay? I really don't wish to struggle with that CGT tax form .
I presume this is a joke but like many jokes it is worth a look. The x is 30 days so you are scuppered anyway.
The purpose of a bed and breakfast deal is to create a disposal for Capital Gains Tax purposes but to regain ownership of the asset. In most cases the disposal will realise a loss, which can then be set off against other gains. But it can also be used to establish a higher base cost for the asset. For example a taxpayer who is non-resident may bed and breakfast their chargeable assets before they enter the UK tax regime
If you haven't been exposed to any real commercial risk this *might* suggest that you never in fact lost beneficial ownership of the asset!
Here's a link to the manual:
I am not entirely sure whether I have not understood your answer, or whether you have not understood my question, or both.
Allow me to clarify my question, which is not a joke to me but it, of course, be a joke to those skilled in the art.
Suppose that I sold 10,000 shares at £2.00 each on June 1st, with a capital gain of £10,000, which would certainly exceed my CGT allowance. I've owned these shares for many years, so it is not as silly a scenario as one might think. I repent so, on 29 June, I purchase 10,000 shares at £2.00 each. Ignoring expenses, I am assuming that I have, for CGT purposes, made no gain nor loss, and need not even report these transacions to the IR?
If I am correct in my above assumptions, what would the case if I were to sell on the 1st April and buy back on the 29 April?
The question is not trivial (to me). Suppose that the shares, owned for many years, were Unit Trusts. Over the years they have changed their idientity several times. They were distribution units, but now they are accummulation units, and so on and so forth. The present managers do not keep records as far back as that. It would be a nightmare to work out, with any exactitude, what the CGT might be. But I am certain that, if I had only sold 5000 of them, I would not have overstepped my CGT allowance. I would prefer to have sold only 5000 because now I have to tell the IR, and GOD knows what the answer is.
I hope that you get my point .
I think the reason bed and breakfast was quoted was to use it in an almost backwards sense (have I got you right there?).
Bed and breakfasting is where you sell your shares just before the end of the tax year, to realise a gain, presumably at about the capital gains tax limit...then in the new year you buy them back again. This means you've managed to use up your capital gains allownace as economically as possible. Inland revenue have since 'outlawed' this by saying "if you buy back the shame shares (or whatever) within 30 days, then the gain isn't counted. So....if you were to buy back within the 30 days it wouldn't be counted. it's certainly not what the inland revene were trying to achive but they do appear to have created a loophole to correct your mistake.
btw, I don't know if it is 30 days. If it is, then i guess you're too late.
As an aside, there is a (legal I think, please correct me if not) way around the bed & breakfast laws, and that's to "bed & isa". You swap shares that are in a self select ISA, to shares outside the ISA, making a gain outside the ISA....and what goes on inside the inland revenue isn't interested in.
Almost true.
What it does is says that you should match the sale of shares against the purchase made a few days later. If you bought them back cheaper than you sold them, you could have a gain to report.
Thanks for the tip.
Am I generally correct about bed & isa? (I hope so as it's a fundamental part of my long term financial planning!)
In message , Stuart Wilcox writes
It didnt have to straddle the tax year change.
I dont understand this.
In message , Jonathan Bryce writes
opps, my mistake.
Sorry i didn't explain very well. Maybe these links will explain better than I could? Basically it's the same as bed & brekfasting, but seemingly legal. It's of no use to the original poster, I just threw it in to explain that bed and brekfasting is still possible.
and explained here
http://66.102.9.104/search?qÊche:73YcF4uR4QoJ:
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