Trading 212

Bowsa

bowlhead99 said:

Bowsa said:

wmb194 said:

Bowsa said:

wmb194 said:

You worry far too much. With only small amounts invested or speculated the chances are that you'll be nowhere near any of the reporting thresholds* and if you only owe small amounts of money and any mistakes are honest you don't need to worry about HMRC either. If this is going to worry you so much you should just stick to a stocks and shares Isa.

*£2,000 p.a. allowance for dividends, £12.3k p.a. capital gains AEA, 4x the AEA of the value of shares sold p.a.

So untill I get:
 £2,000 in dividends 
£12,300 in sold shares 

I don't even need to declare anything?

Yes, as a basic rate taxpayer you won't need to declare anything and your overall annual capital gain = profits - losses from realised trades, so this doesn't include paper profits or losses. The value of shares sold will be >£49,200.

what if you're no longer a basic rate tax payer?

Everyone has different financial affairs.  If you're trying to avoid getting bogged down in the detail of every possible combination of what could happen to every taxpayer with every type of personal circumstance, it is best to just focus on your own personal circumstances.

If you are a simple basic taxpayer earning comfortably less than the higher rate threshold and you don't get more than £2k of dividends or £12.3k of capital gains in a tax year, and you aren't required to do a self assessment form for any reason (or you are required to do self assessment, but you don't have sales proceeds of over £49.2k), then you will not need to tell HMRC about your investing results, unless you want to claim losses to carry forward to future years.

However, if you were a higher earner, you should be aware that although the first £2k of dividends have a tax rate of 0%, they are still seen as 'income' for the purposes of tax rules. So for example if you have £49k of salary and £1.5k of dividends, you wouldn't be paying tax on the dividends, but the fact that you now have total income over the £50k higher rate threshold means that your personal savings allowance for interest income reduces, and you could be on the hook for some child benefit clawback if you or your partner have been claiming it. Similarly if you have £99.9k of salary and other income and then you get £200 of dividends, there's no tax to pay on the dividends but you have now moved to total of income of over £100k and will lose some of your personal income tax allowance, causing more of your salary to be taxed at higher rate.

So when asking on here for help, if you tell us you have simple affairs and your earnings are just PAYE plus a bit of bank account interest, you'll probably get an answer starting with the caveat 'as a basic rate taxpayer...' and we can rule out the more complicated stuff.

However, if you're not a basic rate taxpayer, there can be more complicated things to worry about - like if you earn between £100-125k you will be doing a tax return and will lose a pound of personal allowance for every couple of pounds of extra income you have, so there's no option to not tell HMRC about a fiver of dividends you earn, because there will be tax consequences.

To keep it simple, focus on your personal circumstances rather than focussing on all the other things that might be relevant if you're circumstances were different.

Firstly apologies as I thought I had replied.

So I am a higher tax earner, though no where near the 100k threshold. 

I am paye though have a company car, the idea of filling in a self assessment feels alien to me and I have no idea of the implications of doing so or if it would even be required if I am only looking to invest at most a couple of thousand a year

Bowsa

Ok I’ve been prowling through the HMRCs website to clarify this. 

“

If your total gains are less than the tax-free allowance

You do not have to pay tax if your total taxable gains are under your Capital Gains Tax allowance.

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”

—————————-

So if I’m not registered for SA or the amount I sold was less than £49,200 (p/a) then I don’t even need to declare it. 

Is that right? 

Reading back through I think this may have been said before though I’ve clearly missed it 

Lee_N

Bowsa said:

Ok I’ve been prowling through the HMRCs website to clarify this. 

If your total gains are less than the tax-free allowance

You do not have to pay tax if your total taxable gains are under your Capital Gains Tax allowance.

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”

—————————-

So if I’m not registered for SA or the amount I sold was less than £49,200 (p/a) then I don’t even need to declare it. 

Is that right? 

Reading back through I think this may have been said before though I’ve clearly missed it

I'm pretty sure that's for the tax year, not p/a.

Others have said in this thread that you're worrying too much, I agree. Nothing wrong with asking questions and learning this stuff, and so you should, but here's my take on it..

You're a beginner and want to get your hands dirty. In my opinion there's no better way to learn than to get actively involved, but as a beginner it sounds like you might be wanting to go too fast. To me it's simple, you open a 212 or Freetrade account and just use something like £1000. Play around at your heart's content and you'll learn the basics pretty quickly. No commissions  other than FX and stamp duty, plus you can buy fractional shares for the US meaning you can get going with very little money.

It will be virtually impossible to hit any gains that you will need to worry about reporting. If by some fluke your £1k increases +1300% putting you over the CGT threshold then you simply employ the services of an accountant and let them worry about it, you'll still be over £11k up.

Come April 6th you should have enough of an idea on whether this stuff is for you or not, if it is then you open an S&S ISA and trade within that, but before doing so (in my opinion) do your homework and decide how confident you are putting large amounts of money into the commission free platforms, but that's another topic.

lozzy1965

For day trading - or short term trading, which this sounds like - you used to be able to set up an account with 'pretend' money to play about with.  Is that still possible, and is that an idea, as you sound like you are at the very beginning of this adventure?

Bowsa

lozzy1965 said:

For day trading - or short term trading, which this sounds like - you used to be able to set up an account with 'pretend' money to play about with.  Is that still possible, and is that an idea, as you sound like you are at the very beginning of this adventure?

Hi Lozzy, 
I suppose I'm looking for a bit of both to be honest with you some i'd like to essentially gamble with. Some I would like to invest in for longer term 5years +

T212 does allow you still to play with fake money which is great, as I'm starting to get to grips a bit with markets opening and closing and limited numbers of trades per day etc