Do I have to pay tax on trading?

[Deleted User]

Hi,

I have started trading as I want it to co-fund my rent. I do work full time so being told I have to pay 2 types of tax is really not appealing, especially with little help given.

I have started with £1000 to spend on various markets (technology, currencies I.E USD, EUR/USD etc,) - Yes, this is with a bit of research

I have made some good gains and defnitually doubling my daily pay before tax which makes me feel so good (and may pay off all my rent and moret after I become extreme). :rotfl::rotfl::rotfl::rotfl::rotfl::rotfl: But is it actually too good to be true? Do I have to pay tax on the profits I make? I use etoro for this.

BigBucket

Hi

Unfortunately you will need to pay Capital Gains Tax if you make over a certain amount of profit in any particular tax year. Currently this is £11700 IIRC.

It gets quite complicated depending on your current tax rate etc... and you are also able to offset any lose too.

It sounds like you won’t be hitting that limit yet but if you start looking at trading seriously you may begin to.

Ta

P

BigBucket

Note; CGT is only applicable when you sell the shares.

trailingspouse

I'm puzzled as to why you think you shouldn't pay any tax on your trading income?

Malthusian

Yes, it's too good to be true, but not because you have to pay tax.

All traders have good months and bad months. Any honest trader will tell you as much. What's your plan to pay the rent when you have a bad month?

[Deleted User]

Malthusian wrote: »

Yes, it's too good to be true, but not because you have to pay tax.

All traders have good months and bad months. Any honest trader will tell you as much. What's your plan to pay the rent when you have a bad month?

My main income is more than sufficient enough to pay off my rent, fund my travel and lunch whilst having a few hundred left over to save, but it hurts my insides to see alot of money going out at once. If I have to pay I guess I'll have to pay. Can I use a stocks and shares ISA on this as well?

Reed_Richards

If you are trading very frequently, "day-trading", then other tax rules may apply.

Heedtheadvice

Yes do note Reed-Richards comment above.
If you trade very frequently you could be considered to be running a 'business' of sorts and the HMRC treat that differently to the more infrequent buying and selling (trading?) that common place as part of investing. I cannot for the life of me remember the actual definition but if you are a frequent trader you would be advised to find out!


You can trade investments as part of a S&S ISA and that would leave you free of any incone and capital gains taxes -providing you meet the ISA rules. To trade you do not need to remove your proceeds from the ISA and there are several platforms/stockbrokers who have the facilities including rapid over the phone and online trades.


You will though be recommended to proceed with caution as it is a risky undertaking and on here the emphasis is certainly for saving and investing rather than trading so expect appropriate advice!!

londoninvestor

Heedtheadvice wrote: »

You can trade investments as part of a S&S ISA and that would leave you free of any incone and capital gains taxes -providing you meet the ISA rules. To trade you do not need to remove your proceeds from the ISA and there are several platforms/stockbrokers who have the facilities including rapid over the phone and online trades.

Yes, although not all instruments are permitted investments. You can't trade currencies in a S&S ISA for example (unless perhaps you use one of the ETFs that tracks a currency pair - I doubt these are the most economic way to do pure currency trading though).

EdGasketTheSecond

If HMRC want tax on trading profits then they must accept losses too offset against other income. As 99% of traders lose money, it would be a bad deal for HMRC to tax traders.

cashbackproblems

as you are only trading small amounts your unlikely to go above the annaul allowance, plus if you dont do a tax return then hmrc are unlikely to find out for small amounts.

you do of course pay stamp duty each time