23 February 2012

Bed and ISA - what's that and can you benefit?

In the old days you could "Bed and Breakfast" shares, unit trusts, etc., to save you Capital Gains Tax. You sold the shares at the end of one day making use of your CGT allowance for the tax year, then bought them back first then next morning. As a new purchase there was no capital gain so no CGT liability.

That is not possible now - you have to leave 30 days between sale and purchase, which leaves too much possibility for the pricing to move against you for most people.

BUT - you can "Bed and ISA", which means selling shares, funds, ... you own which are not in a Stocks and Shares ISA and then buying them back in your ISA. That way there is no future CGT liability since an ISA protects you from that.

You could also "Bed and Spouse" which means that you sell and your spouse buys back.

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