Buying and selling shares - CGT question.

bones02

Hi all, long time lurker, first time poster.

I am a newish investor to the stock market who has tried to take advantage of the massive drop in banking sector shares during the credit crunch. I have done alright for myself so far and am looking to take a quick 15% profit as I think that the turbulence in the market will see the shares fall to a point where I can by in again in the next few weeks.
Can anyone confirm my understanding of the 30 day rule designed to stop bed and breakfasting? If i take 15% tomorrow and buy in again at a lower price next week will I have to pay a CGT bill? From my research I have read that if I were to do the above 'the sale is not matched with an earlier purchase, but with your later re-purchase.' (Incademy) but I don't understand the implications of this.
Any help is much appreciated.

CLAPTON

bed and breakfast was a way of maximising your yearly CGT allowance if you don't actually want to sell your shares

so lets say you buy 100k worth of shares in july 2007
by july 2008 they are worth 109,600 (just suppose)
then if you sell them your CGT allowance covers the profit so no tax to pay

but if you actually wanted to keep them, then you used to be able to buy them back immediately (bed and breakfast) at the new price of 109,600

so if in 2009 you really wanted to sell, the CGT will be based on the 109,600 price rather than 100,000 price. So you were making use of the otherwise unused CGT allowance for 2008.


Now if you buy sell, buy sell, buy sell etc all in one tax year the B&B rules makes no diffference to you whether you wait 30 days or not.

If you post example figures and dates i will show you how it works in practice.

bones02

Many thanks CLAPTON I think you have sorted it for me. I am looking to take a small (less than £9,600) but quick profit now and then rebuy within in the next few weeks to take advantage of the seemingly endless volatility in the banking sector. I figure their will be some speculative story in the press that will see the banking shares I have drop by 10% or so again in the next few weeks... If not then I have a least made a welcome profit!

fatpig_2

What happens when the next US bank goes under. Bank shares won't be going up and down then, they'll just be going down.