One Family Money reader has inquired about the pros and cons of bed and breakfast deals.

No he's not talking about paying £20 to stay in someone's house and sample their cooking, it's a share dealing practice to avail of tax allowances.

Mr GR said he has been advised by his stockbroker to carry out a B&B deal and he's not sure if he should go ahead with it.

If Mr GR's doubt stems from any notion that the practice is not above board, he needn't worry.

According to the president of the Institute of Taxation in Ireland, Mr Michael Mullins, the £1,000 (€1,269) provision is there and there is nothing wrong with availing of it.

Bed and breakfasting is a way of using up an individual's tax free allowance for capital gains tax.

Anyone who makes a gain on capital investments such as shares, property, certain bonds and currency is liable to capital gains.

Each individual is allowed to earn up to £1,000 without paying tax in any given year.

The tax-free capital gains tax threshold is no longer transferable between spouses.

Over this limit, capital gains are taxed at 20 per cent. If a shareholder has made less than £1,000 in capital gains in the tax year, the bed and breakfasting facility can be used to technically make that gain and unlock the allowance.

So if you decide to bed and breakfast, your broker will sell enough shares to realise a capital gain of £1,000 at the end of trading one day and buy them back at the same price in the morning. Any stockbroking charges would be allowable before calculating the gain.

Bed and breakfasting is not as common as it used to be because it's not worth that much to the small investor but it may still be worth doing for some.

Some married investors combine the husband and wife's allowance by transferring the shares into both names before the deal.

It is not just an artificial transaction and the client should get bought and sold documentation. Stamp duty of 1 per cent is payable for both the sale and purchase.