Capital Gains Tax bed and breakfasting

chucknorris

I know that now you cannot sell and buy back your shares to cut capital gains tax. But I read that the restrictions (I think it's 30 days) only apply if you are buying back exactly the same shares.

Would it therefore be possible to sell an allshare FTSE tracker and re-invest the proceeds into a FTSE 100 tracker the same day and avoid these rules? They are certainly not the same but similar enough for me to be content to do it.

Richie(UK)

Hi Chuck,

My understanding is that the shares/securities must be identical. The two that you are suggesting are not identical; similar perhaps but not identical.

chucknorris

Richie(UK) wrote: »

Hi Chuck,

My understanding is that the shares/securities must be identical. The two that you are suggesting are not identical; similar perhaps but not identical.

Thanks, that too is my (laymans) understanding of the rule. It doesn't really effect me at the moment because my non isa investment is only 25k and I am unlikley to leave it in to the point where it would grow enough to have a profit over the CGT allowance (chance would be a fine thing).

However it's not impossible that I may keep topping this investment up if (as is very likely) savings rates stay low as my fixed rate bonds mature, as savings rates are so low.

I_did_give_a_Barclays

From my limited understanding I would also agree on the basis that the investments aren't identical.
I'm hoping you may be able to help me in my understanding of the rule (apologies for hijacking the thread a little).
I've been lucky enough to make some money on Barclays shares which I bought in March 2009. I have bought and sold several times during this tax year but always repurchased within the 30 days. Does this mean the initial profit doesn't count towards CGT?.
e.g. if I bought shares for £4000 then sold for £12000 but repurchased for say £10,000 . Would the CGT profit be £8000 (from initial sale) or £2,000 because they were repurchased at a cost, or both ?
I've read the Inland revenue guidelines several times but can't come to a convincing conclusion.
I realise I may have got it completely wrong. Are there any experts out there with simple explanations (other than those who want to charge for the information)

Aegis

chucknorris wrote: »

I know that now you cannot sell and buy back your shares to cut capital gains tax. But I read that the restrictions (I think it's 30 days) only apply if you are buying back exactly the same shares.

Would it therefore be possible to sell an allshare FTSE tracker and re-invest the proceeds into a FTSE 100 tracker the same day and avoid these rules? They are certainly not the same but similar enough for me to be content to do it.

I believe you could even sell out of a L&G FTSE100 tracker and into an HSBC FTSE100 tracker and it wouldn't count as bed and breakfasting.

Of course, you'd then be in a FTSE100 tracker still... Unlucky!

Biggles

I_did_give_a_Barclays wrote: »

e.g. if I bought shares for £4000 then sold for £12000 but repurchased for say £10,000. Would the CGT profit be £8000 (from initial sale) or £2,000 because they were repurchased at a cost, or both?

Assuming you had bought the same number of shares each time, it would mean you'd made a gain of £2,000 (the disposal (£12,000) is matched with the purchase within 30 days (£10,000) and you therefore hold shares whose final disposal cost will be matched with the original purchase cost of £4,000.

I assume the OP is considering selling just before triggering the CGT threshold and, by buying a different share, starting again from zero.

chucknorris

Aegis wrote: »

I believe you could even sell out of a L&G FTSE100 tracker and into an HSBC FTSE100 tracker and it wouldn't count as bed and breakfasting.

Of course, you'd then be in a FTSE100 tracker still... Unlucky!

My original investment is an allshare tracker but I take your point, it is with Fidelity so maybe I could just switch it to an HSBC allshare tracker as they too have every low charges

Myrmidon_J

I'm intrigued by this...

What if I sold Invesco Perpetual Corporate Bond Income and bought Invesco Perpetual Corporate Bond Accumulation?
What if I sold M&G Recovery 'A' Acc and bought M&G Recovery 'X' Acc?
What if I sold Royal Dutch Shell 'A' shares and bought Royal Dutch Shell 'B' shares?

I find it incredibly hard to believe that Gordon Brown has left such a obvious barn door open to abuse the B&B system!