What is the bed and breakfast rule for capital gains tax?

Full answer

Before 1998, investors would sell shares to bank a gain (using their annual exemption) or a loss, then buy them back the next morning -- 'bed and breakfasting'. The 30-day rule (the share-matching rules in s.106A TCGA) shut this down. When you dispose of shares, HMRC matches them in a fixed order: first to shares bought on the same day, then to shares bought in the next 30 days, and only then to your existing pooled holding. Who it affects: anyone disposing of shares, funds or units held outside an ISA or pension and hoping to use their GBP 3,000 Annual Exempt Amount for 2026/27, or to bank a loss. If you sell and rebuy the same security within 30 days, the sale is matched to the cheap repurchase, so almost no gain or loss crystallises -- defeating the point. Worked example: you own 1,000 shares bought at GBP 5 (base cost GBP 5,000), now worth GBP 8 (value GBP 8,000). You want to realise the GBP 3,000 gain to use your exemption tax-free. You sell at GBP 8 and rebuy at GBP 8 the next day. Because the repurchase is within 30 days, HMRC matches your sale to those new shares -- gain effectively nil -- and your original GBP 5 base cost stays locked in. You have wasted your exemption and still face the gain on a later sale. Legitimate alternatives: wait more than 30 days before rebuying; 'bed and ISA' (sell, then rebuy inside your ISA, GBP 20,000 allowance); 'bed and SIPP'; or have a spouse buy the shares. CGT rates for 2026/27 are 18% within the basic-rate band and 24% above. Use the capital gains tax calculator to model the gain and the ISA calculator to plan a bed-and-ISA.

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