Before March 1998 ‘bed and breakfasting’ of shares was a generally accepted piece of tax planning. This would work by an investor selling shares to realise a gain and then buying them back immediately on the market. “Why did they want to make a gain?” I hear you asking. This was usually done to crystalise a gain which was equivalent to the CGT annual exemption which would otherwise have been lost. From March 1998 new rules were introduced which made this approach more difficult.
March 1998 ‘30-day rule’
From March 1998 this kind of planning was somewhat scuppered by a rule that said that any acquisitions of the same shares within 30 days of a disposal would be matched with the disposal proceeds. Therefore on the basis that acquisition costs were generally equivalent to the disposal proceeds no gain (and no ability to use the annual...
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Home >Articles > Bed and breakfasting before the Budget?
Bed and breakfasting before the Budget?
Before March 1998 ‘bed and breakfasting’ of shares was a generally accepted piece of tax planning. This would work by an investor selling shares to realise a gain and then buying them back immediately on the market. “Why did they want to make a gain?” I hear you asking. This was usually done to crystalise a gain which was equivalent to the CGT annual exemption which would otherwise have been lost. From March 1998 new rules were introduced which made this approach more difficult.
March 1998 ‘30-day rule’
From March 1998 this kind of planning was somewhat scuppered by a rule that said that any acquisitions of the same shares within 30 days of a disposal would be matched with the disposal proceeds. Therefore on the basis that acquisition costs were generally equivalent to the disposal proceeds no gain (and no ability to use the annual...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
