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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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If I sell 100% of stock AAA and then rebuy a. within 30

Customer Question

If I sell 100% of stock AAA and then rebuy

a. within 30 days same tax year do I have to average rebuy cost with original cost
b after 30 days but in same tax year is purchase regarded as independent for tax purposes
c. asper a but new purchase in next tax year
d asper b but purchase in next tax year
Submitted: 4 years ago.
Category: Tax
Expert:  TaxRobin replied 4 years ago.

Hello and thank you for posting your question.

If you sell and then rebuy in 30 days your cost of the rebuy is what the original cost was for the shares you bought. If you sell or dispose of the entire holding, then the cost is the total cost of the holding. You would need to wait till after the 30 days to rebuy the same shares.

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Customer: replied 4 years ago.

Sorry answer not clear and incomplete. Lets drop

Expert:  TonyTax replied 4 years ago.

Hi.

These are the rules as they apply to your scenarios:

a If you re-purchase shares in AAA within 30 days of selling shares in AAA then the disposal and re-purchase are matched as far as is possible. So, for example, you have 1,000 shares in AAA which cost £1,000. You sell 1,000 shares in AAA for £2,000 and purchase 1,000 shares in AAA within 30 days of the disposal for £2,100. For tax purposes, you have made a loss of £100 and you are left with your original 1,000 shares which cost £1,000.

b If you sell shares in AAA and re-purchase them after 30 days then you have a new holding with a new cost. So, for example, if you hold 1,000 shares in AAA costing £1,000 and you sell them for £2,000, you have made a gain of £1,000. As you re-purchased the 1,000 shares more than 30 days after the previous disposal you have a new holding of 1,000 shares costing £2,100.

c and d If the disposal occurs at the end of one tax year and the re-purchase occurs at the start of a new tax year, the rules as I have outlined them in a and b above still apply. The fact that the transactions have occurred in different tax years makes no difference to the tax treatment.

The rules of identification and matching of share transactions are set out here.

I hope this helps but let me know if you have any further questions.