CGT prep ahead of Budget 24 + Bed and Breakfast rules

tipsandtoes

Hi.

I am new to MSE Forum, hello everyone!

I am selling my holdings in my GIA ahead of the 30/10/24 budget in order to rebase the book costs. I think the CGT rates will go up and the 10% rate will double so I want to rebase book costs now.

Before 30/10, I want to sell and buy again the next day the same fund (L&G Global 100 acc, ISIN GB00B0CNH056) but in the income class (L&G Global 100 inc, ISIN GB00BG0QP158) to avoid being out of the market for 30 days (ie the bed and breakfast rules which requires a taxpayer not to buy the same share within 30 days, in which case the transaction is not considered as a true disposal).

I can't do the same with my Berkshire Hathaway Class B shares (ISIN US0846707026) as the Berkshire Hathaway Class A shares are too expensive: I would sell the B shares one day and invest for 30 days into an S&P 500 tracker, then move back to Berkshire Hathaway after the 30 day window.

I just wonder whether HMRC considers that replacing one fund in the accumulation class by the same fund in the income class within the 30 days is considered a disposal, and not a share reorganisation.

My accountant tells me "Inc and Acc shares are different shareholdings. Therefore, the bed and breakfast rules would not apply here. Each class of shares will have its own separate pool for calculating the base cost and associated capital gains or losses on disposal." but I wonder if he is correct as I also read about share reorganisation being subject to the bed and breakfast rules, and I find that confusing.

Any thoughts will be most gratefully received! Thanks all.

EdSwippet

FYI, same question, different forum:

CGT prep ahead of Budget+ Bed and Breakfasting rules - The Lemon Fool

vacheron

I am in a similar position in having a chunk of gains in a GIA which I would have had a long and painful time disposing of with the current GCT annual allowance, even if Labour didn't mess with GCT in the budget...which I consider to be almost inevitable.

If your long term preference would have been to continue to hold the exact same shares, and you only wanted to hedge against the CGT rise, you could sell before the 30th and if GCT doesn't rise, buy the same shares back after the budget announcement well within the 30 day period.

If CGT does increase, you can still follow your plan of buying "similar" investments instead to avoid the share matching rules. 

As it appears you are trying to limit time out of the market., if married you could also Bed and Spouse and buy the exact same shares back in your spouses name. You could even do this on the same day / time (or even simultaneously if you had some temporary cash available to use while your first sale settles).

In my case, I have recently gifted all the shares I am considering selling to my wife as she has a large basic rate band remaining, we will sell enough of the shares in her name to bring her to just under the 40% income tax band (10% CGT), and use up her £3k CGT allowance. We will then re-buy the same stocks using her remaining 2024-25 ISA allowance which will crystalise those gains for CGT. 

I will then buy back all the outstanding investments into my GIA on the same day, while she waits for 30 days for her sales to settle and eventually crystalise.