Tax Question - help!

[Rosemarie87]

Hi,
So I have started trading this year and I am just trying to do my tax return.
I have other employed and self employed income but I don't know where to put my trading income.
If I treat it as self employed income, then should I have registered for VAT as I'm over £85k? - but how would that work?
Gains - £87,000
Losses - £55,500
Total Gains after losses - £31,500
Then I need to take into consideration my deposits and withdrawals.
Is it better to treat it as capital gains? and therefore I would be able to use the tax free allowance aswell?
It is a mixture of day, swing and long term trades

Please help - I've been researching for days but my brain is now scrabbled and its taking me away from my trading time haha!

 

[Trader333]

You are best seeking professional advice but either way they are not classed as income but rather capital gains / losses.

 

[Rosemarie87]

You are best seeking professional advice but either way they are not classed as income but rather capital gains / losses.

Thank you for your help Trader333, I was just really wondering what others do. I have since spoken to HMRC who advised capital gains and helped over the phone to explain what figure to put where as the capital gains side of the SA tax return was confusing me

 

[tomorton]

I hope your tax issue works out OK but meantime, how would you summarise your trading success? Most of us can only dream of tax issues arising from profits.

 

[Rosemarie87]

I hope your tax issue works out OK but meantime, how would you summarise your trading success? Most of us can only dream of tax issues arising from profits.

I suppose I don’t follow the only trade a small percentage of your account rule, I’m more of a risky trader. Which as you see from my losses isn’t always a good thing. Up until a few weeks ago, my losses were only £20k so have lost a lot recently. I mainly trade crude oil and natural gas in at least 1000 barrels crude, and 10k contracts natural gas.
Still very much learning and think I’ve been lucky to get as far as I have.
Sorry if I’m not much help but I would also appreciate being pointed in the direction of how to get consistent success

 

[tomorton]

I suppose I don’t follow the only trade a small percentage of your account rule, I’m more of a risky trader. Which as you see from my losses isn’t always a good thing. Up until a few weeks ago, my losses were only £20k so have lost a lot recently. I mainly trade crude oil and natural gas in at least 1000 barrels crude, and 10k contracts natural gas.
Still very much learning and think I’ve been lucky to get as far as I have.
Sorry if I’m not much help but I would also appreciate being pointed in the direction of how to get consistent success

I can only admire your profits (and honesty) but I guess we're all looking for consistency - can't expect to be lucky for ever. But the basis for building consistency has to be there in the first place, as opposed to random entries and random exits. I'm sure you don't take random trades like that so what's your requirement for say getting long on say crude? And what makes you stay in the trade or exit the trade?

But risk management is the thing that gets most traders into trouble, and you can't plan to have good luck next year and the next year and every year. so, what's the plan?

 

[Rosemarie87]

I can only admire your profits (and honesty) but I guess we're all looking for consistency - can't expect to be lucky for ever. But the basis for building consistency has to be there in the first place, as opposed to random entries and random exits. I'm sure you don't take random trades like that so what's your requirement for say getting long on say crude? And what makes you stay in the trade or exit the trade?

But risk management is the thing that gets most traders into trouble, and you can't plan to have good luck next year and the next year and every year. so, what's the plan?

It depends what im doing, if im day trading, I look for a pattern and aim to be out of the trade soon after entering for a quick profit as it all adds up. If its looks like its still going the way I want I may stay in longer, even days and get a better profit. it goes wrong for me if I haven't got as much time as I need at my laptop due to other work or the children, then I find im stuck. I need to set sl more often really. This year I plan to put a lot more time into learning more and trading more and hoping to have a good set up in my office by the end of the year.
I prefer natural gas for longer term trades as its generally low in summer, high in winter. and crude I day or swing trade.
I'm no expert as ive been stuck in sell on crude recently and that's whats cost me most of my account

 

[tomorton]

Still, have to like your approach - know what you want to trade, trade what you know, go with the trend, keep it simple.

Stop-losses are key.

 

[Sharky]

If you need professional advice, perhaps have a chat with http://www.accountantsfortraders.co.uk/ - they seem to be one of the few practices specialising in trading. If you do, then let us know how it went.

 

[Rosemarie87]

If you need professional advice, perhaps have a chat with http://www.accountantsfortraders.co.uk/ - they seem to be one of the few practices specialising in trading. If you do, then let us know how it went.

Thank you, I will look into this

 

[CertainWay]

Rosemarie,
First congratulations for having a profitable trading year.
What's the capital gains tax in UK for short term trading?
If you are going to declare it as a self-employment income, I hope you documented all expenses related to trading so that you can write them off and pay less taxes. Is your self-employment part an LLC or like an independent contractor?
Thanks
CT

Hi,
So I have started trading this year and I am just trying to do my tax return.
I have other employed and self employed income but I don't know where to put my trading income.
If I treat it as self employed income, then should I have registered for VAT as I'm over £85k? - but how would that work?
Gains - £87,000
Losses - £55,500
Total Gains after losses - £31,500
Then I need to take into consideration my deposits and withdrawals.
Is it better to treat it as capital gains? and therefore I would be able to use the tax free allowance aswell?
It is a mixture of day, swing and long term trades

Please help - I've been researching for days but my brain is now scrabbled and its taking me away from my trading time haha!

 

[Rosemarie87]

Rosemarie,
First congratulations for having a profitable trading year.
What's the capital gains tax in UK for short term trading?
If you are going to declare it as a self-employment income, I hope you documented all expenses related to trading so that you can write them off and pay less taxes. Is your self-employment part an LLC or like an independent contractor?
Thanks
CT

Thank you.
If youre a lower rate tax payer (20% tax payer- earn upto the threshold of £46350) you pay 10% Capital Gains tax on any capital gains over the CGT threshold of £11,700.
If youre a higher rate tax payer (earn over £46350) you pay 20% Capital Gains Tax on capital gains over the CGT threshold of £11,700.
rates quoted are for period of 18/19.
Obviously if your capital gains (profit from trading) are less than the CGT threshold of £11,700 you don't pay the tax.
Its quite good if you are earning income from anywhere else and also trading because you basically get 2 different allowances, plus the CGT is at a lesser rate than income tax
This is the route that I took after speaking to HMRC over the phone, hope it helps anyone else in a similar position.
I also amended my 17/18 tax return to show my capital gains loss (just under £3k) for 17/18 and there is a section to carry losses forward, which I done, and therefore inputted that previous loss on 18/19 tax return and saved even more against tax due for this period.
My self employment income is from a separate sole trader business I have.

 

[CertainWay]

I'm glad you figured it out. It's such a relief to get taxes done every year......

Thank you.
If youre a lower rate tax payer (20% tax payer- earn upto the threshold of £46350) you pay 10% Capital Gains tax on any capital gains over the CGT threshold of £11,700.
If youre a higher rate tax payer (earn over £46350) you pay 20% Capital Gains Tax on capital gains over the CGT threshold of £11,700.
rates quoted are for period of 18/19.
Obviously if your capital gains (profit from trading) are less than the CGT threshold of £11,700 you don't pay the tax.
Its quite good if you are earning income from anywhere else and also trading because you basically get 2 different allowances, plus the CGT is at a lesser rate than income tax
This is the route that I took after speaking to HMRC over the phone, hope it helps anyone else in a similar position.
I also amended my 17/18 tax return to show my capital gains loss (just under £3k) for 17/18 and there is a section to carry losses forward, which I done, and therefore inputted that previous loss on 18/19 tax return and saved even more against tax due for this period.
My self employment income is from a separate sole trader business I have.