Wash Sale vs Bed and Breakfast — UK Rules vs US Rules Explained

If you use Robinhood UK, Tastytrade, or any US-origin broker, you’ll see references to “wash sales” in their documentation and tax reports. Ignore them. The US wash sale rule doesn’t apply to UK taxpayers. But the UK has its own version — and it works differently.

The UK bed and breakfast rule

Under TCGA 1992 s.106A, if you sell shares and repurchase the same shares within 30 calendar days after the sale, the disposal is matched to the repurchase rather than the Section 104 pool. The cost basis of the sold shares becomes the price you repurchased at.

Our detailed 30-day rule guide covers seven common mistakes people make with this rule. The key points:

The window is 30 days after the sale only — not before. Shares bought weeks earlier are already in your pool.

It applies to all disposals — gains and losses alike.

ISA purchases don’t trigger it. That’s why bed and ISA works.

It applies across all your GIA accounts, including across different brokers.

The US wash sale rule

The US version, under IRC §1091, disallows a loss if you buy “substantially identical” securities within 30 days before or after the sale. The disallowed loss gets added to the cost basis of the replacement shares.

Key differences from the UK rule:

The US rule is both wider (61-day window, catches losses only) and narrower (doesn’t affect gains) than the UK rule. They’re solving the same problem — preventing artificial loss creation — but with different mechanics.

Why UK investors on US brokers get confused

Your Robinhood UK or Tastytrade transaction report may flag certain trades as “wash sales” and adjust the cost basis accordingly. This is the US rule being applied automatically by the broker’s system.

As a UK taxpayer, disregard these wash sale adjustments entirely. They’re irrelevant to your UK tax return. You follow HMRC’s matching rules — same-day, 30-day bed and breakfast, Section 104 pool — not the US wash sale rule.

This is one reason why using a US broker’s built-in tax reports for UK filing is dangerous. The numbers will be wrong — they’re calculated under the wrong country’s rules. The Financial Times has covered the growing confusion among UK retail investors using US platforms, and it comes down to this: your broker’s tax tools are built for US clients.

Holding period — another US concept that doesn’t apply

In the US, gains on assets held over a year qualify for lower “long-term” capital gains rates. This doesn’t exist in the UK. As HMRC confirms, the rate depends on your income band, not how long you held the asset. Selling a share you bought yesterday is taxed at the same rate as one you’ve held for 20 years.

The practical takeaway

If you’re a UK tax resident using a US broker:

Ignore wash sale flags in broker reports.

Don’t use the broker’s gain/loss calculations for your SA108.

Apply HMRC’s three matching rules yourself — or use TaxBull, which applies UK rules only, with no US wash sale adjustments.

This article covers the interaction of UK and US tax rules at a general level. If you have tax obligations in both countries, consult a cross-border tax specialist.