Day trading AIM in an ISA?

[Final1001]

Hi guys, I am a bit of a newbie when it comes to ISAs and that lol

I am literally in the process to start day trading Penny stocks on the UK AIM market full time, but I am not too sure how tax trading in an ISA works.

If I day trade in an ISA share trading account does that mean ALL profits are tax free? I will not need the full ISA allowance, but say I put £2000 in a trading ISA account and build the account to £20000 in 1 year, does that mean I dont have to pay any tax what so ever??

(I will be moving in and out of different positions daily.)

Thanks for your help 😛

 

[Final1001]

Anyone 🙁

 

[TraderLT]

Anyone 🙁

If you deposit £2000 in to an ISA and trade it up to £20,000 - you are correct, there will be no capital gains tax to pay.

 

[propaspaz]

Anyone 🙁

Hi Cronman

Just wondering what ISA company you are using to trade your penny stocks with, as I would like to do something similar?

I have an ISA account comprising ETFs and would like to also now trade penny stocks either using this ISA account or a new one specifically for penny stocks.

Cheers

 

[piphoe]

sounds great! what is an ias, and where can i get one?

 

[remme001]

I'm surprised you are able to trade penny stocks at all in an ISA. There are certain restrictions on what can be traded in an ISA. What broker are you using OP?

 

[bulltradept]

I'm surprised you are able to trade penny stocks at all in an ISA. There are certain restrictions on what can be traded in an ISA. What broker are you using OP?

There are no restrictions while trading or investing in an ISA for UK small cap stocks, or penny stocks as you state.

 

[Arya cryptocurrency]

Hi Final1001,

Great questions! It’s exciting that you’re looking into using an ISA for your trading, especially with such a dynamic approach like day trading on AIM.

To clarify, while ISAs are fantastic for shielding your investments from capital gains tax and income tax, they are generally designed for longer-term investing rather than frequent trading or day trading. The UK tax rules around ISAs tend to consider very active trading as a form of business activity, which might mean HMRC could view your day trading as a business rather than casual investing. If that’s the case, profits might not be protected within the ISA and could be subject to different tax rules.

That said, if your trading activity is relatively moderate and more like investing rather than running a business, then gains within an ISA are usually tax-free, regardless of how often you trade. So, in theory, yes — if you put in £2,000 and it grows to £20,000 within a year, all those gains inside the ISA should be free from tax.

However, it’s important to be cautious. The more active your trading, especially daily, the more it might look like a business activity to HMRC, which could have implications. Also, keep in mind that ISA allowance limits apply, and trading within an ISA doesn't increase your allowance.

Since day trading can be complex from a tax perspective, I’d highly recommend chatting with a tax professional or financial advisor who can look at your specific situation. They can give you tailored advice and help ensure you’re compliant with the rules and making the most of your ISA.

Good luck with your trading journey — it sounds like an exciting venture! Just make sure to stay informed and get the right advice along the way.

Cheers!

 

[bulltradept]

Hi Final1001,

Great questions! It’s exciting that you’re looking into using an ISA for your trading, especially with such a dynamic approach like day trading on AIM.

To clarify, while ISAs are fantastic for shielding your investments from capital gains tax and income tax, they are generally designed for longer-term investing rather than frequent trading or day trading. The UK tax rules around ISAs tend to consider very active trading as a form of business activity, which might mean HMRC could view your day trading as a business rather than casual investing. If that’s the case, profits might not be protected within the ISA and could be subject to different tax rules.

That said, if your trading activity is relatively moderate and more like investing rather than running a business, then gains within an ISA are usually tax-free, regardless of how often you trade. So, in theory, yes — if you put in £2,000 and it grows to £20,000 within a year, all those gains inside the ISA should be free from tax.

However, it’s important to be cautious. The more active your trading, especially daily, the more it might look like a business activity to HMRC, which could have implications. Also, keep in mind that ISA allowance limits apply, and trading within an ISA doesn't increase your allowance.

Since day trading can be complex from a tax perspective, I’d highly recommend chatting with a tax professional or financial advisor who can look at your specific situation. They can give you tailored advice and help ensure you’re compliant with the rules and making the most of your ISA.

Good luck with your trading journey — it sounds like an exciting venture! Just make sure to stay informed and get the right advice along the way.

Cheers!

I respectfully state you are wrong regarding day trading in an ISA from an HMRC perspective.

I can find nothing which states this from the HMRC website.

Indeed because beiong a successful day trader is such a niche line of employment, and the success rate of it is so small, why would HMRC bother?

Especially when you take into account you are paying Stamp on most share purchases, plus a PTM levy over £10k.

 

[RolloTape2025]

You don't pay any tax on an ISA. It is irrelevant how you trade.

 

[Visaria]

Hi Final1001,

Great questions! It’s exciting that you’re looking into using an ISA for your trading, especially with such a dynamic approach like day trading on AIM.

To clarify, while ISAs are fantastic for shielding your investments from capital gains tax and income tax, they are generally designed for longer-term investing rather than frequent trading or day trading. The UK tax rules around ISAs tend to consider very active trading as a form of business activity, which might mean HMRC could view your day trading as a business rather than casual investing. If that’s the case, profits might not be protected within the ISA and could be subject to different tax rules.

That said, if your trading activity is relatively moderate and more like investing rather than running a business, then gains within an ISA are usually tax-free, regardless of how often you trade. So, in theory, yes — if you put in £2,000 and it grows to £20,000 within a year, all those gains inside the ISA should be free from tax.

However, it’s important to be cautious. The more active your trading, especially daily, the more it might look like a business activity to HMRC, which could have implications. Also, keep in mind that ISA allowance limits apply, and trading within an ISA doesn't increase your allowance.

Since day trading can be complex from a tax perspective, I’d highly recommend chatting with a tax professional or financial advisor who can look at your specific situation. They can give you tailored advice and help ensure you’re compliant with the rules and making the most of your ISA.

Good luck with your trading journey — it sounds like an exciting venture! Just make sure to stay informed and get the right advice along the way.

Cheers!

Total nonsense.