Declaring profits

dave119e

Hi,

Last year (financial year) I made a profit of approximately £8000 on the stock market. I haven't yet declared my earning to the tax man, which I know needs to be done by the end of this year.
My tax rate is 20%, so I'm below the £10,000 threshold for tax. Should I still fill in a tax return for my earnings?

dunstonh

are the gains income or capital?

Are they realised gains or just a difference in current value? (i.e. you havent sold any investments yet)

Are the investments inside an ISA?

Linton

Money you make by buying and selling shares is "Capital gains", not "earnings". They are taxed separately. For 2012-2013 the Capital Gains Tax Allowance was £10600. You only made a profit of £8K and so are not liable for capital gains tax (assuming you didnt make capitals gains elsewhere selling other items of value).

If you sold more than a total of £42400 of shares you will have to declare this even if you didnt make any profit and wont actually be charged tax.

You will need to keep records of your purchases and sales for up to 7 years in case HMRC want to check up on your activities.

You can avoid all this hassle by trading within an S&S ISA. Anything done within an ISA will not be taxed, should not be reported, and you dont have to keep records.

dave119e

Sorry, it was capital gains not earning as I have a PAYE job. And they weren't from an ISA, I bought and sold shares myself.
Thanks for the feedback. I'll keep a record of my transactions for the future

Lokolo

If you don't normally complete a tax return
If you have worked out you have no Capital Gains Tax to pay, you don't need to give HMRC details of your gains or disposals.

However you should still keep detailed records of buys, sells and profits/losses.

http://www.hmrc.gov.uk/cgt/intro/report-gain.htm
http://www.hmrc.gov.uk/rates/cgt.htm

bigadaj

dave119e wrote: »

Sorry, it was capital gains not earning as I have a PAYE job. And they weren't from an ISA, I bought and sold shares myself.
Thanks for the feedback. I'll keep a record of my transactions for the future

If you receive dividends then additional tax is due if you're a higher rate taxpayer, also if you've only made a paper profit then that isn't classed as a gain until you sell. So you can avoid or reduce capital gaisn tax by staggering sales across tax years.

jimjames

dave119e wrote: »

And they weren't from an ISA, I bought and sold shares myself.

You can still buy & sell shares yourself inside an ISA.

If you haven't used your allowance then it is a very easy way to not have to worry about tax either for dividend income or for CGT.

atush

I agree, why not buy and sell from an ISA in future?