Under the capital gains rules as originally enacted, it was possible to realise a gain or loss for tax purposes, while effectively continuing to hold the asset after completion of the transaction. A ‘bed and breakfast’ transaction was a term commonly used where a person wishing to crystallise an allowable loss (to set against other chargeable gains in the period) or a chargeable gain (to utilise the annual exempt amount or other exemptions or reliefs) usually in respect of shares, without disposing of them permanently, sold the shares (e.g. at the close of business one day) and reacquired them (e.g. at the opening of business on the following day).

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