Trading 212

Bowsa

bowlhead99 said:

Bowsa said:

I am employed so  CGT forms only need to be filled in if I make more than £12,300 gain.
and thats annually reset, so if I earn
£12,299 year 1
£12,299 year 2
£12,299 year 3

meaning just under 36k of income from investments over 3 years then I still would not need to declare anything whatsoever.

Yes you have the right idea that £12300 of gains in a tax year - when you are not required to do a self-assessment tax return for any other reason -does not require you to tell HMRC. The clock stops and restarts at the end and beginning of each tax year. For year 2 you might find the exempt amount has gone up or down rather than stayed the same - generally, it has gone up.

But try not to mix up the terminology - you are not talking about making 'income from investments' here, you are talking about making capital gains from selling investments for more than you paid for them. Income would be stuff like dividends or interest or property income distributions received from your investments, which are covered under income tax rather than capital gains tax and have their own tax rates. 

So if you earn 'income' (whether actually received, or earned inside an accumulating ETF), that would be reported under income tax rather than capital gains tax. If there's not a lot of it you can write to HMRC and tell them, so that they can adjust your tax code if necessary, without doing a formal self-assessment form.

christ, now we're getting into it then lads - would I gain 'dividends or interest or property income distributions received from your investments' through buying S&S's in Trading 212 - essentially I am looking for the easiest, simple way to get used to a platform without having to deal with forms and filings with the tax office (not because I am trying to hide anything, just because I want to start getting into S&Ss and this side of it, is a massive turn off).

I was starting to think that I was at a stage whereby I could buy some shares through T212 and not really have to worry about the tax aspect......until you mentioned the above.

eskbanker

Bowsa said:
essentially I am looking for the easiest, simple way to get used to a platform without having to deal with forms and filings with the tax office (not because I am trying to hide anything, just because I want to start getting into S&Ss and this side of it, is a massive turn off).

I was starting to think that I was at a stage whereby I could buy some shares through T212 and not really have to worry about the tax aspect......until you mentioned the above.

But you seem to keep ignoring the helpful mentions of the most obvious way of avoiding tax issues, i.e. using an ISA - why?

Bowsa

eskbanker said:

But you seem to keep ignoring the helpful mentions of the most obvious way of avoiding tax issues, i.e. using an ISA - why?

TBH - I missed this.

I already have an S&S ISA with Vanguards LS80 which I am putting money into buying through T212 shares seems a bit faster paced and a bit more flexible in the ability to put in much smaller amounts as regularly as I would (or wouldnt) like.

bowlhead99

Bowsa said:

christ, now we're getting into it then lads - would I gain 'dividends or interest or property income distributions received from your investments' through buying S&S's in Trading 212 - essentially I am looking for the easiest, simple way to get used to a platform without having to deal with forms and filings with the tax office (not because I am trying to hide anything, just because I want to start getting into S&Ss and this side of it, is a massive turn off).

I was starting to think that I was at a stage whereby I could buy some shares through T212 and not really have to worry about the tax aspect......until you mentioned the above.

How do we know if you are going to get any dividends or interest or property income distributions when you buy the shares you want to buy in your shares account? We don't know if you are going to buy any shares that produce any income.  If you do, you will need to consider whether you have gone over your dividend allowances (if it's dividend income) or personal savings allowance (if it's interest) or if it's property income distributions from a Real Estate Investment Trust there is no special allowance and you would tell HMRC to charge you your marginal rate.

For example if you buy Microsoft or BP shares, they have paid an annual dividend for years, except in some years, when they didn't.

If you buy Amazon or Netflix shares, they have never paid dividends and may never do so, preferring to expand their business instead.

If you buy HSBC  or Barclays shares, they paid last year but are not paying this year because the banking regulator said they should preserve their money in these unprecedented times and not give it out to shareholders.

If you buy ordinary shares in Lloyds Banking Group, they are not paying dividends on them this year but I expect they will continue to pay them on the preference shares.

If you buy shares in HICL Infrastructure or Target Healthcare REIT or Tritax Big Box REIT, which are investment companies which own infrastructure projects and let out care homes and warehouses respectively, they have all said they will be paying their first quarterly dividend for 2020 but are not definitive on the total dividend for the year on how that will continue for later quarters because the effect of Covid-19 on the business is unclear.  HICL's is a UK corporate dividend and taxed as a dividend. Target and Tritax's payments are generally classified as property income distributions.

If you buy shares in Vanguard's FTSE All-World index UCITS ETF, there will definitely be some income because many of the companies they own pay dividends even though many of them don't. If you invest in the one that internally accumulates those dividends instead of paying it out to your Trading212 cash account (e.g. VWRP instead of VWRL), you will need to figure out for yourself how much income you notionally received, by reading the report they publish annually.

If you do buy shares in (e.g.) Microsoft, which is a US company, when you try to place your first trade you will probably need to fill out a 'W8BEN' form which is a US tax form which allows your broker to arrange for any dividend income to be paid with only 15% withheld for US taxes instead of the standard 30% that the US levies on foreign investors. If you also have UK tax to pay on the same income (because you have gone over your UK dividend allowance), you will be able to offset the 15% US tax from the UK tax bill on the same dividends. Though if you are a basic rate taxpayer you won't be able to offset it all, as basic rate taxpayers don't pay as much as 15% UK tax anyway.

The way to buy shares through Trading 212 and *not* worry about the tax aspect is to just use their ISA account, as there is no UK tax inside an ISA so no need to keep records. But as you mentioned, you're already using Vanguard's ISA product and you can't subscribe to both in the same tax year, so you are stuck with recordkeeping - either to work out how much tax to pay, or to prove that you are correct to not have any tax to pay. 

If your plan is to use Trading 212 because it is less boring and faster paced than your ongoing investment in Vanguard trackers, and you will buy buying and selling little and often rather than slow and steady for the long term, then that implies lots of records to keep on top of.

pafpcg

Bowsa said:

...............
...............
meaning just under 36k of income from investments over 3 years then I still would not need to declare anything whatsoever.

There's a further requirement to report all gains and losses irrespective of whether the net gain was within the CGT allowance, if the volume of your trading within any tax year is great enough, you'll have to report your trading if you fill-in Self Assessment tax returns.

The HMRC guidance is:

"You still need to report your gains in your tax return if both of the following apply:

• the total amount you sold the assets for was more than 4 times your allowance
• you’re registered for Self Assessment"

PS: If the trading is within an ISA, then nothing needs to be reported.

Bowsa

bowlhead99 said:
The way to buy shares through Trading 212 and *not* worry about the tax aspect is to just use their ISA account, as there is no UK tax inside an ISA so no need to keep records. But as you mentioned, you're already using Vanguard's ISA product and you can't subscribe to both in the same tax year, so you are stuck with recordkeeping - either to work out how much tax to pay, or to prove that you are correct to not have any tax to pay.

Thanks mate - it would seem that without getting into the nitty gritty then, that there is no 'easy' way to trade stocks and shares. I don't believe that I can open the T212 ISA as I am already paying into an ISA through Vanguard..... As this was more something that I wanted to do on the side, I don't think I can.....withough moving from vanguard to T212 which I am not looking to do?

bowlhead99

Bowsa said:

bowlhead99 said:
The way to buy shares through Trading 212 and *not* worry about the tax aspect is to just use their ISA account, as there is no UK tax inside an ISA so no need to keep records. But as you mentioned, you're already using Vanguard's ISA product and you can't subscribe to both in the same tax year, so you are stuck with recordkeeping - either to work out how much tax to pay, or to prove that you are correct to not have any tax to pay.

Thanks mate - it would seem that without getting into the nitty gritty then, that there is no 'easy' way to trade stocks and shares. I don't believe that I can open the T212 ISA as I am already paying into an ISA through Vanguard..... As this was more something that I wanted to do on the side, I don't think I can.....withough moving from vanguard to T212 which I am not looking to do?

It's 'easy' to trade them, you just have to keep records about it - so if you think at 7pm on a Tuesday in late April you'll buy some Netflix shares and then the next afternoon you log back in and sell them because the quarterly results had come out and they were what you expected (or not what you expected), then you have a gain or loss to go into your little book.

If you had bought some Netflix shares at $260 and some more at $350 and $410  and then you sell half of all your shares for $380, you will be comparing the half of the shares you just sold with the average buy price of all the ones you had bought (unless some of the ones you had bought in the past had already been sold and matched to earlier sales...) so you will need records of how your holding evolved over time. You will probably also find the broker's systems to be inadequate because although they can tell you how much you paid for what  and when, there will some bits about UK tax law they probably won't take into account - like if you then buy back some of the Netflix shares a week later, the sale at $380 needs to be matched with the cost of that later repurchase, instead of the matching it with the historic average buy price . Fortunately, Netflix don't pay a dividend, but if they did, that would be another thing to track.

Frankly, buying and selling little and often is a pain for tax purposes which is why people might prefer to do it in ISAs or pensions where records of individual buys and sells aren't needed. Before the likes of Trading212 came along with their cheap commissions, people generally wouldn't buy small amounts of stock because the dealing costs put them off. Now it is more accessible, though there is of course the question of how much of a pain it would be if this new service provider, who doesn't make any money out of you, goes out of business and you have to wait a year for your holdings to be moved onto someone else's platform before you continue.  Those sorts of issues might discourage people from putting much money in such a strategy, which is then perhaps a bit easier because if you only bought and sold £1000 of stock for £1100 and received £10 of dividends, there's no way you are over your £12300 gains limit or £2000 dividend allowance.

pafpcg said:

Bowsa said:

meaning just under 36k of income from investments over 3 years then I still would not need to declare anything whatsoever.

There's a further requirement to report all gains and losses irrespective of whether the net gain was within the CGT allowance, if the volume of your trading within any tax year is great enough, you'll have to report your trading if you fill-in Self Assessment tax returns.

Well yes, but that was mentioned in my earlier post (https://forums.moneysavingexpert.com/discussion/comment/77077919#Comment_77077919)
which is the one that he responded to saying he was 'employed' and saying he wouldn't need to declare anything whatsoever - presumably meaning that he didn't do a tax return (though I am employed, and I do do one ) 

Bowsa

bowlhead99 said:

Bowsa said:

bowlhead99 said:
The way to buy shares through Trading 212 and *not* worry about the tax aspect is to just use their ISA account, as there is no UK tax inside an ISA so no need to keep records. But as you mentioned, you're already using Vanguard's ISA product and you can't subscribe to both in the same tax year, so you are stuck with recordkeeping - either to work out how much tax to pay, or to prove that you are correct to not have any tax to pay.

Thanks mate - it would seem that without getting into the nitty gritty then, that there is no 'easy' way to trade stocks and shares. I don't believe that I can open the T212 ISA as I am already paying into an ISA through Vanguard..... As this was more something that I wanted to do on the side, I don't think I can.....withough moving from vanguard to T212 which I am not looking to do?

It's 'easy' to trade them, you just have to keep records about it - so if you think at 7pm on a Tuesday in late April you'll buy some Netflix shares and then the next afternoon you log back in and sell them because the quarterly results had come out and they were what you expected (or not what you expected), then you have a gain or loss to go into your little book.

If you had bought some Netflix shares at $260 and some more at $350 and $410  and then you sell half of all your shares for $380, you will be comparing the half of the shares you just sold with the average buy price of all the ones you had bought (unless some of the ones you had bought in the past had already been sold and matched to earlier sales...) so you will need records of how your holding evolved over time. You will probably also find the broker's systems to be inadequate because although they can tell you how much you paid for what  and when, there will some bits about UK tax law they probably won't take into account - like if you then buy back some of the Netflix shares a week later, the sale at $380 needs to be matched with the cost of that later repurchase, instead of the matching it with the historic average buy price . Fortunately, Netflix don't pay a dividend, but if they did, that would be another thing to track.

Frankly, buying and selling little and often is a pain for tax purposes which is why people might prefer to do it in ISAs or pensions where records of individual buys and sells aren't needed. Before the likes of Trading212 came along with their cheap commissions, people generally wouldn't buy small amounts of stock because the dealing costs put them off. Now it is more accessible, though there is of course the question of how much of a pain it would be if this new service provider, who doesn't make any money out of you, goes out of business and you have to wait a year for your holdings to be moved onto someone else's platform before you continue.  Those sorts of issues might discourage people from putting much money in such a strategy, which is then perhaps a bit easier because if you only bought and sold £1000 of stock for £1100 and received £10 of dividends, there's no way you are over your £12300 gains limit or £2000 dividend allowance.

pafpcg said:

Bowsa said:

meaning just under 36k of income from investments over 3 years then I still would not need to declare anything whatsoever.

There's a further requirement to report all gains and losses irrespective of whether the net gain was within the CGT allowance, if the volume of your trading within any tax year is great enough, you'll have to report your trading if you fill-in Self Assessment tax returns.

Well yes, but that was mentioned in my earlier post (https://forums.moneysavingexpert.com/discussion/comment/77077919#Comment_77077919)
which is the one that he responded to saying he was 'employed' and saying he wouldn't need to declare anything whatsoever - presumably meaning that he didn't do a tax return (though I am employed, and I do do one ) 

this basically confirms my thoughts - the concern about not filling in a form correctly or making a mistake and knackering up my income or getting fined etc is a pain that I think I am better off avoiding. 

Vanguard, don't appear to do any individual shares through my acount that I can access. So I think I may just have to keep paying into this.

bowlhead99

Bowsa said:

Vanguard, don't appear to do any individual shares through my acount that I can access. So I think I may just have to keep paying into this.

Correct, Vanguard's direct-to-the-customer service is a service for buying their own fund and ETF products in an account (which can be an ISA or pension account, or unwrapped). If you were desperate to try sharetrading there are other platforms and brokers out there which will sell Vanguard fund products *and* other people's  fund products *and* offer dealing on a stock exchange, so you could do  a transfer of your existing balances from Vanguard and keep everything in one account, but generally not at zero transaction fees as none of the mainsteam ones really offer that. 

Perhaps the best thing that will come of your avoiding the tax admin by not doing lots of sharetrading, is that you won't lose loads of money sharetrading. Every cloud, eh!

Bowsa

I suspect a financial advisor would likely be the only way to go about this, though is there a provider that would advise me through all this IF i were to look into stocks and shares seperately from an ISA.......

or how much could I expect to pay for a FA - not sure it would be worth it based on the amount I am free to invest at the moment either way, the sooner I start to learn about these things the better.