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This is what HMRC said when asked I fall under trading/investment :
As with any other activity, you need to consider the relevant circumstances as a whole before coming to a decision on whether the activity amounts to a trade or not. Generally, for individuals we take the view that transactions in shares which do not amount to investment are speculative transactions falling short of trading, unless there are particular factors which take the case ‘out of the norm’.
Shares which are dealt with speculatively or as investments are dealt with under the Capital Gains Tax rules.
appreciated solid Don't allow fear of complexity with the IR to affect your judgment trading The number of trades...or how long...or anything else...is irrelevant as far as they care Its a simple number they want 'other earned income' and thats it They really really don't care about the process you use to make it....I know I have spent hours with them discussing my various activities over the years Ok thats all I have Enjoy the day Jim
Botbot Johnny to solid Absolutely If you can add you don't need an accountant ( I can lend you ace if you want ( cybernetic entity )) All the revenue care about is how much 'extra other' income you earned... I can tell you from over 40 years both hear and over seas they don't give a fruit how you did it...as long as its legal Kind things Jimster
As an example - I'm obviously extremely honest with my self employment tax return. I then have a Ltd company I own and I decided to have the accountant I use for that Ltd company look over the books for the sole trader account I thought I was keeping rather well - fact was, I was over paying every year by quite a bit so I had a nice refund. But all said and done, we're not talking millions here so HMRC never contacted me and I never contacted them in terms of what I thought I owed.
Thankfully I got a nice rebate - so always good to get a £60 a month bookkeeper to keep you in line.
Keep the audit trail (hard not to do when everything is electronic) and file what you think is correct - any issues in the future, you can resolve.... I'm guessing they won't be a million miles away from fact.
Solid. Your Accountant is correct, you only need to provide the nett. Also, honestly, you are over analysing this. If you know the numbers you have, then report those, keep the audit trail yourself for back-up/just in case. HMRC are not looking for people like yourself who might, maybe make a few hundred or maybe a thousand over the allowance. You can always ring HMRC.! Believe it or not, they are very helpful (95% of the time when you get someone that hasn't been having a bad day.!)
Hi botbot, Unfortunately I spoke to EToro and they leave it upto clients to file their CGT and keep track of records. So I am on my own here.
I am spending about 100-200 Quid to do the calculations with an accountant to make sure my number is below the allowance.
I ended up with that figure by just adding all profits for net gain and adding all losses for net loss.
However when we factor in these rules ( See below ) total gain can actually be higher possibly.
I will spend next few days to calculate and update you guys to let you know how I arrived at this. I am about to try this : http://cgtcalculator.com/ -> It apparently does a good job by factoring in all the rules. So I'll see what number I land into. But it needs input in certain format so bit of manual work involved.
Accountant just confirmed to me that I don't need to report every single transaction with HMRC, just net gain is enough apparently.
Same day rule, 30 Day rule ( Bed and breakfast ) , all other shares average cost basis ( Section 104 ).
Solid Snake. Your Investment Provider (AG Bell, eToro, Fidelity etc) should be able to provide you with a GCT tax view report. If the number is above allowance, you pay, if it's not, you don't.! You can declare the loss if you have one, but if a profit, then don't bother, unless it's over the CGT allowance.
Losses from trading cannot be included to reduce income tax I paid as part of my full time employment.
Because I am not self employed / doing trading full time. So as a retail investor losses/profits are all chargeable under CGT which has no bearing towards personal tax allowance or income tax you pay as part of employment ( if you are full time employed that is ).
Hi Johnny, you are correct. Spread betting is exempt from CGT. CFD Trading still incurs CGT. For Tax year 2020 - 2021 : My total accrued profit ~GBP32000 My total accrued losses - ~GBP20600
Total gain 32000 - Total loss 20600 = Net gain GBP11400
Since this is under GBP12300 I am assuming I don't incur any CGT.
But I am planning on getting accountant to work out correct values. Because there are all these complex rules : Same day rule, 30 Day rule ( Bed and breakfast ) , all other shares average cost basis ( Section 104 ).
Posted on the retirement last week how it's best to make full use of £20,000 a year allowance in an ISA. Paperwork is a headache and theses accounts along with SIPP's offer a solution. You need to be selective when considering an ISA especially when you're an active trader. Dealing costs can mount up quickly. I notice in the links below some dealing costs are zero but what's the spread when you are trading ? They've got to make money out of you somewhere. Your broker needs to make full use of the many market makers out there so you get a competitive price. Commonly known as price improver. Another one , have you had trouble dealing on busy volume days. ? Not much good if you struggle to get a price. Need a broker where the system runs smoothly. Maybe create a thread to chat about various brokers before you sign up ?
Botbot, you said : "Two levels of tax, one is paying under 40% tax through your employment, and the higher rate is paying even £1's worth above the 40% in your employment."
In this case it will be 20% for higher rate tax payer for CGT and this has nothing to do with employer and income I earn from my full time job as that is taxed separately via PAYE and comes off of personal tax allowance.
Thanks for the replies guys, just finished the call with HMRC after 1 hour on-line.
Summary : - CFD are taxable under CGT as chargeable assets - I am not self employed and this would count as investment not trading - He mentioned that if I am doing this as full time job and my employer is also into stocks etc. Then it would be counted as trading.
botbot is correct Don't worry toooo much about how you earned the money...just tell HMRC that you have it You are doing the right thing by talking to HMRC ( they are obliged to help you ) But You do not need an accountant to tell you what you already know Declare it on your SA800 form ( all downloadable ) And if you so choose add an explanatory note in the box provided Have fun The Jimster
Solid Snake. A is the right answer. If you SOLD and made the profit, and you SOLD and made the loss, and those are the correct two numbers you have. You have profit less loss =........then take off CGTA = tax to pay. Two levels of tax, one is paying under 40% tax through your employment, and the higher rate is paying even £1's worth above the 40% in your employment. If you SOLD and made a loss in the previous years you can bring that forwards as well. So it would be Profit less this years loss less previous years loss =......... less CGTA =......... Hope that helps.