stamp duty

[mystical_ag]

hi all ...

I have recently started online trading & so far I have paid £500 in stamp duty. Although, I have made approx 1.5% gains, after stamp duty.

However, Is there a more efficient way to trade, and reduce stamp duty?

 

[c6ackp]

Try CFDs

 

[Racer]

You also have to remember that you pay interest on longs on CFDs so you may not pay stamp but if you hold for some time, you might as well have paid the stamp! But you can trade on margin.
You get a small amount of interest if you are short but beware of special borrow if the stock is tight.. so you may end up paying interest on the short too.. this can also vary whilst you are holding it too.. it can be special borrow at times and others not.

 

[the blades]

Hello Mystical,

I'm not sure how interest is structured with CFD's, but with forward contracts on spreadbets with CMC you pay about 4.6%, minus any dividends. You can get better in the bank, so you can cash in your equity protfolio and save money on this alone.

The average charge by CMC for FTSE 350 stock is LESS than stamp duty. You save on commission and if successful, on Capital Gains Tax.

Have a look at my thread "cost of spreadbetting" to see how I'm saving money compared tor actually holding the shares. PM me if you want any clarification on the spreadsheet.

COME ON ENGLAND!!!!!!!!
UTB

 

[mystical_ag]

thanks all ...
I've just had a look into CFD's, that seems the better option for me.

cheers !

 

[Mayfly]

Hi,

This is the way that I’d look at this:

1 Days in Year = 365
2 Stamp Duty % = 0.5
3 Opportunity cost of Finance % = 4
4 Days Time Value of CFD Funding = 45.62

So, in Excel you'll have the expression: “Days Time Value of CFD Funding” = (“Stamp Duty %”*” Days in Year”) / “Opportunity cost of Finance %”

Basically, if you’re looking at trading CFDs then with a net financing cost or spread of 4% you’ll be better off paying the stamp if you hold the position for more than 46 days.

HTH

Cheers

Mayfly