Put CGT to bed

In the past, many investors used to realise a gain equivalent to the CGT tax-free allowance on the last day of the old tax year, and then buy exactly the same investment back again at the start of the new tax year. But the so-called "bed-and-breakfasting" loophole was closed in 1998, and you must now wait at least 30 days before you can buy the same investment again.

However, bed and breakfast has been replaced by a range of other strategies which can be useful ways to realise a tax-free gain (or loss). You sell a share or fund, and then repurchase the same holding in a tax-efficient wrapper such as an individual savings account (Isa) or self invested personal pension (Sipp) as all or part of the annual subscription. The sale is a crystallisation for capital gains tax purposes.

The maximum you can 'Bed & Sipp' is 100 per cent of your earnings, or £3,600 if greater. You also need to take into account other contributions you are paying to pensions. Laith Khalaf of Hargreaves Lansdown points out that 'Bed & Sipp' has the added benefit of attracting tax relief on the contribution. "For example, if £10,000 worth of funds are bed & sipp'd, a further £2,500 tax relief is added to the Sipp and higher-rate taxpayers can claim up to an additional £2,500 tax relief," he explains.

Other strategies include 'Bed & Spouse' where you move investments into your spouse's name, using their CGT allowance and Isa/Sipp allowance. Transfers between spouses do not crystallise CGT.

You can't buy the same investment back within 30 days, but you could sell one holding and take the opportunity to buy another to diversify your portfolio - this is known as a 'Bed-&-Spread' strategy.

Using the appropriate 'Bed & ...' strategy can significantly reduce your CGT bill, but you will have to act soon the end of year tax deadlines are fast approaching. And make sure your investment decisions aren't being clouded by tax considerations.