UK Tax due on trading profits.

[Pound foolish]

Does anyone know the UK capital gains tax postion on Share trades?

I know you can have £9,600 gains before tax is due.
Is this per individual trade gain, or based on the cumulative total of all trade gains over the tax year?
Can trade losses be offset against gains made?

Personal belongings of £6,000 or less are exempt from capital gains tax. Owned equities could be classed as "personal belongings" if they belong to a person although this is meant for jewellry, paintings and the like.

How do day traders deal with (reduce) Captial Gains Tax or can you go "self-employed" and have the personal tax allowance and claim other things back to reduce your tax liability?

Can you use both Captial Gains £9600 and the Personal tax allowance together?

To have to give the government 40% of your day trade gains having made the investment and taken all the risk is not that attractive. Do you all keep below the allowance of £9600?

 

[N Rothschild]

CGT is 18%

 

[jaet1989]

Spreadbet, tax free for the time being..

 

[fifty2aces]

There are a lot of people on the internet who think they know far more about tax than they actually do - my advice would be to speak to a professional if you are earning (or anticipate earning) enough for tax to be an issue, or not to worry about it until you are earning enough.

That said, Genics is correct that the max CGT rate is 18% (rather than the 40% on income). This was quite a surprising change though - it wouldn't surprise me if it later changed back to 40%, so I wouldn't make any long term assumptions. Additionally, HMRC now have an increased incentive to regard your profits as income, in order to pick up 40%. Essentially you should be seeking professional advice.

Spreadbet, tax free for the time being..

Perfect example - this is probably true, but there are conflicting stories, so don't trust anonymous internet posters - seek professional advice.

 

[JP1966]

Fifty is right -speak to an expert.

If you are deemed to be a fulltime trader then the IR will not allow you to have tax free spread betting, a CGT allowance or indeed even income taxed as capital gains at all.

 

[raysor]

Does anyone know the UK capital gains tax postion on Share trades?

I know you can have £9,600 gains before tax is due.
Is this per individual trade gain, or based on the cumulative total of all trade gains over the tax year?
Can trade losses be offset against gains made?

Personal belongings of £6,000 or less are exempt from capital gains tax. Owned equities could be classed as "personal belongings" if they belong to a person although this is meant for jewellry, paintings and the like.

How do day traders deal with (reduce) Captial Gains Tax or can you go "self-employed" and have the personal tax allowance and claim other things back to reduce your tax liability?

Can you use both Captial Gains £9600 and the Personal tax allowance together?

To have to give the government 40% of your day trade gains having made the investment and taken all the risk is not that attractive. Do you all keep below the allowance of £9600?

Cumulative total.
Losses can be offset against gains, and you can carry losses forward.
CGT is a different tax from income so you can use as well as personal allowance, but not against each other.
It is £9600 each for husband and wife.
Shares are not classed as personal belongings!
There are some rules about buying back shares within 30 days of the sale.

 

[Pound foolish]

Spreadbet, tax free for the time being..

Yes but it is a bet.

I want to know what I could lose and that I can still hold on to my shares for a rally.

 

[Pound foolish]

I have answered my own post thinking about it over the week.

Thank you for the advice given, it mirrored my worst fears!

Here it is:

Drip feed the annual ISA allowance £4,000 a year into an ISA share dealing account. Self Trade have one. You could do this over say three years then start day trading full time.

Any gains are then 100% tax free.

I know this amount may seen small beer to some of you but it would limit newbie losses and if successful would mean a quite sizable pot in five years or less........all gains being tax free.

My problem is I like my Unit trusts ISA.

 

[jaet1989]

Yes but it is a bet.

I want to know what I could lose and that I can still hold on to my shares for a rally.

It depends on the size of the trade, but to limit risk you may consider placing a stop loss order, this essentially lets you decide how much you can afford to lose. As for holding on for a rally, if you mean holding over consecutive days, yes you can.

James

 

[jaet1989]

Yes but it is a bet.

I want to know what I could lose and that I can still hold on to my shares for a rally.

It is a bet if you do not know the markets, research the instrument you wish to invest in, maybe attend a seminar, companies such as CMC markets, who offer free seminars or webinars to clients.

Regards

 

[raysor]

There is such a thing as tax planning, something, to my regret, I have never done. In some cases it is not wise to only worry about tax when you get to a position of becoming liable to it!
Having said that, if your income from trading is nowhere near the taxable threasholds there is no point in being obsessed about whether your income is taxable or not.
I am sure if it became a "problem" any sensible person would consult a qualified person and not attempt to get the answer from the internet, even a prestigious forum like this one.

Another point that may have been raised in this thread is the differences between types of trading (SB, CFD etc).

It is easy to get the impression that the underlying object is different for each platform.
But basically there is one unique object and that is to get the direction of movement correct within your available timescale.
Maybe I am not putting this across well, but I have often heard investors say that they have lost so much money trading shares, that they will trade share options instead. Implying that, maybe because less capital required, it is easier to make money in Share options than in shares!!
Similary with SB or any other geared product. If your investment value goes down when you think it will go up you lose.
Of course you may get a "second chance" if you actually own shares, in the fact that if they go against you initially they may recover and gain over time. But strictly speaking this should be your original strategy (which you may not be able to do with a margined/time restrained product like SB/options. At least not without additional expense.

 

[Pound foolish]

I couldnt agree more Raysor.

Buy shares for short term (Day) gains then sell. If they go down then hold until prices recovers to give profit. Over time it is win win.

SB CFD long short are all danfgerous in that there is no second chance.

Whatever, the last thing you want to do is handover a percentage of these gains to HMRC!
Hence the post.

 

[N Rothschild]

Over time it is win win.

some proper idiots give out advice on this forum!