Day Trader Tax Implications

Doc10_2

Dear All

Advice please on trading stocks and shares for a living. I am currently unemployed and want to do this for a living - do I need to register as self employed, as a business sole trader or as a UK Ltd company? What are the tax implications?

Thanks
Doc10

snax

Trading stocks and shares thru a stockbroker - online or telephone is investing - so will incur a tax liability on profit/share as well as other trading costs.
Speculating on share 'price' movement with a spreadbetting firm is gambling so afaik free of tax, although it will no doubt be 'of interest' to HMRC should you start to make regular or large sums from doing it. [fat chance imo ]

My opinion ..... forget all about it and go and beg for a job [or 2, if hours are workable] ... do anything your good at [or cleaning, shops, sales asst, driver, deliveries, agency work....etc].

I had 3 jobs at one point working 70 hrs a week - managed to keep it up for about 5 yrs before burning out and needing to cut back - money was good and didn't have any spare time to waste it on buying non essential purchases ... cleared debts, bought 1st property and had cash in bank at end.

What attracts you to trading shares?

debbie42

Googled a link here which explains the difference between a share trader and a share investor:
http://timetotrade.eu/wiki/index.php/Day_Trader_%26_Investor_Status_for_Tax_Purposes

You could try asking on TMF: there are some on there who trade shares for a living. I'd expect a few reasonable questions along the way, such as "what makes you think you can turn a profit" etc.

In terms of status, why would you need to be registered as a Limited Company?

Mahmood_Reza

Are you intending to make the leap and do it full time, or part time? If you are determined to do this then consider starting as an individual (personal allowances and annual exemption (CGT) available. Have you invested in shares before? Are you focusing on particlar market sectors? I know you didn't ask but be careful with income generation invalidating any benefits that you may in receipt of.

jinkster

Very interested job - good luck with that!

McAzrael

snax wrote: »

Trading stocks and shares thru a stockbroker - online or telephone is investing - so will incur a tax liability on profit/share as well as other trading costs.
Speculating on share 'price' movement with a spreadbetting firm is gambling so afaik free of tax, although it will no doubt be 'of interest' to HMRC should you start to make regular or large sums from doing it. [fat chance imo ]

It's pedantry, I know, but if you're just spread betting (on financials or sport or anything else) then it is gaming and doesn't create a tax liability, but if it forms part of some other taxable activity then there may be a tax liability. eg, if you are investing in shares on the LSE and sell a FTSE spread with a spread betting company by way of a hedge then profit from the two activities combined would be taxable. HMRC call this trading, which is unhelpful as trading means something quite different in gambling.

AzimScot

I seen a guy make 11.5K in 4 mins doing day trading using technical stratagies and analysing markets tell me a job or business that can make that amount unless your Rupert Murdoch.

kazwookie

Please remember the stock market may go up or DOWN!

6am

McAzrael wrote: »

It's pedantry, I know, but if you're just spread betting (on financials or sport or anything else) then it is gaming and doesn't create a tax liability, but if it forms part of some other taxable activity then there may be a tax liability. eg, if you are investing in shares on the LSE and sell a FTSE spread with a spread betting company by way of a hedge then profit from the two activities combined would be taxable. HMRC call this trading, which is unhelpful as trading means something quite different in gambling.

That is interesting. Can you provide a link? From what I have seen spreadbetting is gambling therefore PL from this activity should not be declared at all. Are you saying that gambling can reduce your tax liability?

AzimScot

you could say that starting a new business and investing 100K is a gamble. Spread betting is tax free HMRC but forex and shares, futures, options are taxible.

stephenni1971

AzimScot wrote: »

I seen a guy make 11.5K in 4 mins doing day trading using technical stratagies and analysing markets tell me a job or business that can make that amount unless your Rupert Murdoch.

And I saw a guy lose £300,000 in an hour!