The 30-Day Rule for Shares (Bed and Breakfasting) Explained

If you sell shares and buy the same shares back within the next 30 days, HMRC matches your sale with the shares you bought back, not with the shares you already had.

That means your gain (or loss) is worked out using the price you bought back at, not the average cost of your older shares. It's often called the "bed and breakfast" rule.

People used to sell shares on the last day of the tax year (the "bed") and buy them back the next morning (the "breakfast"). This let them use their tax-free allowance and reset the cost of their shares to a higher price, without really changing their investments.

The 30-day rule, in place since 1998, stops this. A sale followed by a quick buy-back is treated as if you never really sold.

A purchase is matched with your earlier sale when all of these are true:

• It's the same shares: the same company and the same type of share, or the same fund.
• It's bought by you, in an ordinary taxable account. Purchases by your husband, wife or civil partner, or inside your ISA or pension, don't count.
• It's bought in the 30 days after the day you sold. If you sell on 3 April, purchases from 4 April to 3 May count.

This rule comes second in HMRC's order: shares bought on the same day as the sale are matched first. Anything not matched by either rule comes from your Section 104 pool at its average cost. Shares you bought before the sale are part of that pool, so they aren't affected by this rule.

Say you own 1,000 shares that cost you £5,000 in total, an average of £5 each. They're now worth £8 each. You'd like to use your £3,000 allowance on the gain, so you sell and buy back a week later. (Fees are left out to keep it simple.)

Because the sale is matched with the shares you bought back, the £3,000 gain you wanted to use simply doesn't happen. You're left holding 1,000 shares with the same £5,000 cost as before, so the gain is still waiting for you when you eventually sell.

If you buy back fewer shares than you sold, only that number is matched with the new purchase. The rest of the sale uses your average cost as normal.

The rule doesn't only affect gains. If you sell shares at a loss to set it against other gains, then buy them back within 30 days, the loss is worked out using the buy-back price. If the price hasn't moved much, most of your loss disappears.

If you want to use your allowance but stay invested, people commonly use one of these. They're all allowed, but each has trade-offs, so check they suit you.

• Bed and ISA. Sell in your ordinary account and buy the same shares back inside a Stocks and Shares ISA. The 30-day rule doesn't apply, and future gains in the ISA are tax-free. You can put up to £20,000 a year into ISAs.
• Bed and spouse. You sell, and your husband, wife or civil partner buys the same shares. You are separate people for Capital Gains Tax, so the purchase isn't matched with your sale.
• Bed and SIPP. Buy the shares back inside a pension. This has its own rules and limits, and the money is locked away until retirement age.
• Wait 31 days before buying back, accepting that the price might move while you're out of the market.
• Buy something similar but different, such as a different fund that follows a similar market. The rule only matches the same shares, so a genuinely different investment isn't caught.

Our calculator applies the same-day and 30-day rules automatically. Paste in all your trades, including any purchases made after a sale, and it will match them the way HMRC does. The "How the tax is calculated" section shows the matched cost for each sale.

If you need to report your gains, our step-by-step guide to the SA108 pages shows where the figures go.