Bed and breakfasting, bed and ISA and bed and spouse

Q: What other alternatives are used?

Waiting more than 30 days. A repurchase on day 31 or later is not matched with the sale and joins the pool at its own cost. The price risk while out of the market is the cost of this approach. Buying a similar but different investment. The 30 day rule only matches securities of the same class. Selling one fund or company and buying a different one with a similar profile is not matched, although it is not the same investment. Buying first and selling later. A purchase made before the sale day joins the pool, so the later sale takes an averaged cost from the whole pool rather than resetting anything (CG51555).

Selling shares and buying the same shares back within 30 days no longer resets their base cost, because section 106A TCGA 1992 matches the sale with the repurchase instead of the shares you already held. Investors who want to use the annual exempt amount or realise a loss now usually wait more than 30 days, buy back inside an ISA, have a spouse or civil partner make the purchase, or buy a similar but different investment.

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What was bed and breakfasting?

HMRC’s manual at CG13350 describes bed and breakfasting as selling an asset only to buy it back a short time later, either to trigger a gain covered by a relief or to trigger a loss, while intending to keep the investment. With shares this was traditionally done overnight: sell one evening, buy back the next morning. The gain or loss was realised for tax, the investor kept the same holding, and the new purchase price became the base cost for the future.

CG51560 records that the matching rule now in section 106A(5) was introduced in 1998 specifically to counter this.

How does the 30 day rule stop it?

Under section 106A(5) of the Taxation of Chargeable Gains Act 1992 (TCGA 1992), if the person making a disposal acquires securities of the same class within the 30 days after it, the disposal is matched with those new securities rather than with the existing holding. The only rule with priority is the same day rule. Shares matched this way never join the section 104 pool (section 106A(5ZA)). The full order is set out in share matching rules.

Illustration only. Hannah holds 5,000 shares in a section 104 pool costing £10,000, now worth £14,000. On 1 February 2027 she sells all 5,000 for £14,000, and on 10 February 2027 she buys 5,000 back for £14,100.

What Hannah hoped for	What the 30 day rule produces
Sale matched with the pool: gain of £4,000	Sale matched with the 10 February purchase: loss of £100
New base cost of £14,100	Pool still 5,000 shares costing £10,000

She has paid dealing costs and has achieved nothing for tax. The rule only applies to acquisitions by the same person in the same capacity, which is why the alternatives below work, and it does not apply if the seller was not UK resident when the later shares were acquired (CG51560).

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Why would anyone want to realise a gain or a loss?

The main reason to realise a gain is the annual exempt amount, which is £3,000 for 2026 to 2027. Realising gains up to that amount each year steadily raises the base cost of a long term holding, so less is taxed when it is finally sold. See the annual exempt amount and capital gains tax rates.

The reason to realise a loss is to set it against other gains of the year or carry it forward; see claiming and using capital losses. Section 16A TCGA 1992 denies a loss arising from arrangements with a main purpose of obtaining a tax advantage, and CG13350 says it should be considered where a bed and breakfast transaction is used to trigger a loss on any type of asset.

How does bed and ISA work?

The investor sells the shares in an ordinary account, subscribes the cash to a stocks and shares ISA, and the ISA manager buys the same shares inside the ISA. The sale outside the ISA is a normal disposal and the gain or loss on it is realised. The repurchase is not matched with it because regulation 34(2) of the Individual Savings Account Regulations 1998 applies sections 104 to 106A separately to ISA investments, as if they were held in a different capacity from any other holding of the same class.

After that, future gains and income inside the ISA are free of tax. The subscription counts towards the ISA allowance, which is £20,000 for 2026 to 2027, so a large holding may take several years to move. Rules on what an ISA can hold are covered in ISA tax rules.

How does bed and spouse work?

One spouse or civil partner sells shares on the market and the other buys the same shares. Section 106A(5) only matches acquisitions made by the person who made the disposal, so the purchase by the other spouse is not matched with the sale. The seller realises the gain or loss, and the buyer’s base cost is the price they paid.

This is different from simply transferring shares to a spouse. A transfer between spouses or civil partners living together is at no gain no loss under section 58, so nothing is realised and the receiving spouse takes over the original cost; see spouse transfers for capital gains. The bed and spouse route needs a genuine market sale and a separate market purchase. Unmarried couples can do the same, but any direct gift between them is at market value; see capital gains for unmarried couples.

What other alternatives are used?

Waiting more than 30 days. A repurchase on day 31 or later is not matched with the sale and joins the pool at its own cost. The price risk while out of the market is the cost of this approach.
Buying a similar but different investment. The 30 day rule only matches securities of the same class. Selling one fund or company and buying a different one with a similar profile is not matched, although it is not the same investment.
Buying first and selling later. A purchase made before the sale day joins the pool, so the later sale takes an averaged cost from the whole pool rather than resetting anything (CG51555).

What mistakes come up most often?

Buying back in a second ordinary account or through a different platform, which is still the same person in the same capacity, so the rule applies.
Reinvested dividends within 30 days after a sale, which are purchases and can be matched with part of it.
Assuming a spouse transfer realises a gain, when it is at no gain no loss.
Exceeding the ISA allowance when moving holdings in.
Not reporting. GOV.UK says that if you are registered for Self Assessment you must report gains where total sale proceeds are more than £50,000, even if the gains are within the allowance.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.