Interest on Loan to Buy shares Tax Deductable? ?

[Mackie]

Hi,

I Sincerely thank you in anticipation, if you can help on this one!

Is the Interest Paid on a loan which was specifically to buy shares (not CFD's), a tax deductable expense?

If it is a tax deductable expense, is there anywhere I can get information that states this?

To explain further;

I took out a loan for £20,000 specifically to buy shares.
The funds were transfered from a loan account to my current account to my trading account all on the same day, exact amount.

I paid stamp duty several times over on buying & selling shares. I made a decent profit when I sold the shares and paid tax on the capital gains.
I rec'd interest on the funds not committed in my trading account and paid tax on the interest rec'd.


I recently rec'd a Tax Guide from City Index for my CFD Trading. It states;
Financing Costs/Financing Income:
"Any Finance payments charged or paid by City Index to your account should be an allowable deduction against your capital gain or a taxable increase in your capital gain respectively".

If I was to take out a loan to buy burgers and then sold them, the interest on the loan would be a deductable expense!

Surely the same rules will apply to my loan to buy shares as applies to the finance fees incurred with a "Long" CFD.

My Sincere thanks if you can help!

Kind Rgds

Mackie

 

[neil]

Do I understand correctly - you borrowed to speculate?

 

[Tuffty]

Mackie, Interest expense is not an allowable deduction for CGT. The CFD issue is different as the interest expense is all wrapped up in the CFD product. See the Inland Revenue web site and the help sheets on CGT.

 

[Mackie]

Hi Neil, After Sept 11, British Airways share price fell to £1.39.. I was confident it would bounce. I took the deposit for the house I was going to buy, borrowed 20k and bought sheds of BAY shares.
Bought and sold a few times .. all the way up to £3.25

Tuffy.. Many thanks. my accountant added back the interest already. :-(... I seen the article on CFD's and thought .. :cheesy: I may be due a refund! .....