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HMRC Tax Rules - Day Trading?

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    HMRC Tax Rules - Day Trading?

    I have recently started day trading for the past few weeks with 3-5 trades per day on average. I wanted to find out about the tax on my gains.

    Do i simply add the total gains/losses or will i have to report each individual gain/loss per trade, to HMRC when i file my annual tax return form?

    Will i be paying CGT @18% or will this be classed as income, therefore liable to pay Income Tax?

    Any advise will be much appreciated. Thanks

    #2
    What does your accountant say?

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      #3
      I will be speaking to him on Tuesday, thought i'd check to see if i can get some advice from the board for now.

      Comment


        #4
        Originally posted by deeniguy View Post
        I will be speaking to him on Tuesday, thought i'd check to see if i can get some advice from the board for now.
        You won't get any in General!

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          #5
          You pay CGT. Have a look at the HMR&C website.

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            #6
            If it is a spread betting account none. Otherwise generally cgt, though if hmrc were to argue its a trade then income tax. The latter is highly unlikely.

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              #7
              They will tax you whilst you make a profit and then point you to the spread betting tax free rules when you make a loss and try to offset your other tax burden.

              HTH BIDI

              Comment


                #8
                Originally posted by deeniguy View Post
                I have recently started day trading for the past few weeks with 3-5 trades per day on average. I wanted to find out about the tax on my gains.

                Do i simply add the total gains/losses or will i have to report each individual gain/loss per trade, to HMRC when i file my annual tax return form?

                Will i be paying CGT @18% or will this be classed as income, therefore liable to pay Income Tax?

                Any advise will be much appreciated. Thanks
                If you trade regularly you will be charged at Income Tax NOT CGT. CGT is based on the risk of holding stocks for more than a month at a time. Day trading which can be a few days is charged at income tax.

                How do I know? See my tax return. Horrible.
                What happens in General, stays in General.
                You know what they say about assumptions!

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                  #9
                  Originally posted by MarillionFan View Post
                  If you trade regularly you will be charged at Income Tax NOT CGT. CGT is based on the risk of holding stocks for more than a month at a time. Day trading which can be a few days is charged at income tax.

                  How do I know? See my tax return. Horrible.
                  Do you have any links to this info?

                  Initially i started day trading a few weeks ago and made more losses than gains. Now i've decided to invest in stocks on a long term basis such as penny stocks.

                  I will not deal with any options, futures, derivatives spread bets etc, just purely stocks on the US market, mainly OTC (Sadly i can't make use of the ISA wrapper if i hold OTC stock)

                  So from what you're saying it seems that day trading is classed by HMRC as a job, hence liable to pay income tax, as opposed to an investor in long term stocks, who is liable to pay CGT?

                  My accountant isn't sure if day trading falls under CGT or Income Tax, depends on how long i hold the stock and is up to HMRC's discretion. Tried calling HMRC to get some clarification on this, but the technical dept always seems busy, so requested a call back twice but to no avail

                  Comment


                    #10
                    Originally posted by deeniguy View Post
                    Do you have any links to this info?

                    Initially i started day trading a few weeks ago and made more losses than gains. Now i've decided to invest in stocks on a long term basis such as penny stocks.

                    I will not deal with any options, futures, derivatives spread bets etc, just purely stocks on the US market, mainly OTC (Sadly i can't make use of the ISA wrapper if i hold OTC stock)

                    So from what you're saying it seems that day trading is classed by HMRC as a job, hence liable to pay income tax, as opposed to an investor in long term stocks, who is liable to pay CGT?

                    My accountant isn't sure if day trading falls under CGT or Income Tax, depends on how long i hold the stock and is up to HMRC's discretion. Tried calling HMRC to get some clarification on this, but the technical dept always seems busy, so requested a call back twice but to no avail
                    There are no hard and fast rules, as even the HMRC guidance acknowledges (link)

                    In Lewis Emanuel & Son Ltd v White, the judge said that he saw short-term transactions as gambling so not trading.
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