Effect of buying and selling shares within 30 days

[Segilla]

I'd appreciate a simple explanation please.
Buy shares 1 June and make a profit of �200 by selling 6 August.
But what is the arithmetic if share sold at a profit of �200 a fews days after buying?

[BigMac]

Could you clarify the question - I'm really not sure what you mean.

If you buy x shares for y price and make �200 profit the selling date doesn't matter - what matters is the share price when you buy and when you sell.

[Segilla]

I'm so sorry for carelessly not stating the *purpose* of my question.

It's to do with CGT and the rules surrounding how to calculate it.
I'd prefer not to make gains over the annual �8500 limit, so to obey the rules, I need to know the effect of selling a share within a month at a profit - as opposed to selling more than a month later where the position is clear.

[BigMac]

OK, I'll preface this by stating that I am NOT a qualified tax accountant nor am I qualified to offer investment advice.

At its simplest, the annual CGT limit applies to a financial year, currently 6 April 2006 - 5 April 2007. In the example you offer, both the purchase and sale fall within the same financial year - whether the sale is within one month of a June purchase or in August. Therefore, the only effect on CGT is whether this takes you over the limit or not.

[Of course, if you have losses carried over from a previous tax year it is possible to make a larger capital gain and still have no tax liability.]

Maybe someone else on AB with more detailed knowledge can advise further? If not, I'd suggest spending some of your capital gains on an accountant.

[Segilla]

Thanks for your response.
I was under the impression that the Chancellor had put a stop to bed and breakfast practises, hence the notion that there was different treatment for shares bought and sold within 30 days.

[BigMac]

I think the 'bed and breakfast' rules referred to the selling of shares immediately before the end of the financial year and then buying them back at the start of the following financial year - I think to crystalise a loss and thus avoid CGT.

There were definitely changes to the rules on this - but as I said, you really should seek professional advice.