Capitals Gains Tax on CFD's in UK

[dwallace1994]

Hi Guys,

I am a relatively new trader, trading in CFD's mainly on indices for the time being.
I have just a question around the tax on potential capital gains one may make.
I know the allowance for the tax year 20/21 is £12,300.
Do you only have to inform the tax office if you were to make a capital gain greater than this figure ? If for example you made a capital gain of £9000 would this have to be declared ?
Also I have a full time job where I work 37.5hrs per week. If I was to make any capital gains would this have any impact or effect on my income tax that I pay through this job.
If anyone can provide any help this would be greatly appreciated as I am new to trading on CFD's and just slightly confused.

Thanks,
David

 

[Trader333]

It is best to seek professional advice on such matters in my view. That said income tax is not the same as capital gains tax so the two should be separate to each other. You still have to report any capital gains you have made even if it is below the tax threshold in the same way that you have to declare earnings even when not liable for tax.

 

[BigDeal]

As stated by Trader333 if you are unsure seek advice, and I am not a tax expert, but just from my own experience I think the rules are broadly thus:

If you make aggregate gains over the year which do not trigger CGT, I don't think you have to report, although there are exceptions : if you are are obliged to complete an annual tax return you must declare any gains (ie whether taxable or not). There is also a rule whereby if disposals are over a certain amount (4 times the CG T allowance level) you must declare.
Your normal income earnings and associated income tax are not affected by gains, but the rate of capital gains tax you pay is determined with reference to your marginal rate of income tax.

 

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