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Where Taxpayers and Advisers Meet

30 Day Rule (B&B)

SRAPUBLIC
Posts:1
Joined:Fri May 21, 2021 3:17 pm
30 Day Rule (B&B)

Postby SRAPUBLIC » Fri May 21, 2021 3:26 pm

I'm wondering if anyone can clarify this for me. So I have to calculate some CGT on non-property asset. In play are section 104 pools, same day purchase and disposal and repurchase within 30 days (This isn’t trading volumes so it’s CGT applicable).

I’m struggling to understand the intention of the share matching rules in the context of the 30 day rule. I understand the 30 day rule is there to stop B&B offset of losses against gains.

So the example the HMRC give is £6000 received on a sale of 4000 shares and then 500 shares reacquired at a cost of £850 within 30 days. So applying the matching rules and matching those 500 shares the disposal proceeds for 500 of those 4000 shares is 500 / 4000 x 6000 = 750. The allowable cost is the 850, so for that 500 shares we show as loss of £100.

Here's what I am struggling is. If the original 4000 shares were bought at say £4000 and there was no reacquisition then that would be a gain for those 500 shares of £250. So applying the 30 day matching rule here actually turns a £250 gain into a £100 loss. That means the taxable gain is less than if we just ignored the rule. I don’t get it, I thought the whole point of the rule was to reduce the level of loss offset available ?

What am I missing here please ?

Jholm
Posts:360
Joined:Mon Mar 11, 2019 4:22 pm

Re: 30 Day Rule (B&B)

Postby Jholm » Mon May 24, 2021 11:04 am

It's basically to stop you rebasing an increased cost for CGT purposes.

Stats
Posts:12
Joined:Mon Mar 05, 2018 10:07 pm

Re: 30 Day Rule (B&B)

Postby Stats » Tue Jul 27, 2021 10:29 pm

No expert, but the rigid 30-day Rule can work in the favour of investors (as in your example) by converting a long term gain into a short term loss. The original low "cost price" still awaits to suffer tax at a later date (unless you again re-purchase at a loss within 30 days!).


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