Profitaker
Established member
- Messages
- 773
- Likes
- 70
mbbcat
It is treated as a capital gain/loss.
It is treated as a capital gain/loss.
Profitaker
Established member
- Messages
- 773
- Likes
- 70
Grant
I beg to differ. In my experience HMRC apply the same rules to short premium as they do long premium. And why not (?) because STO followed by BTC is exactly the same as BTO followed by STC, only the order is reversed. Normally I'd find a tax manual reference, but hey, it is new years eve :clap:
'Ave a good one matey !
I beg to differ. In my experience HMRC apply the same rules to short premium as they do long premium. And why not (?) because STO followed by BTC is exactly the same as BTO followed by STC, only the order is reversed. Normally I'd find a tax manual reference, but hey, it is new years eve :clap:
'Ave a good one matey !
PT,
If you have experienced this, then I won’t dispute the point.
If not, then with respect, I would question your definition of difference. BTO you pay (money), STO you receive (money). The latter is the crucial difference I think; regardless of its nature, it’s essentially income (would this make the cost of BTO an outcome?)
Damn New Year’s eve, Sir. Get the manual out (then you have a good one, mate).
Grant.
If you have experienced this, then I won’t dispute the point.
If not, then with respect, I would question your definition of difference. BTO you pay (money), STO you receive (money). The latter is the crucial difference I think; regardless of its nature, it’s essentially income (would this make the cost of BTO an outcome?)
Damn New Year’s eve, Sir. Get the manual out (then you have a good one, mate).
Grant.
Profitaker
Established member
- Messages
- 773
- Likes
- 70
Grant
Think of it this way - it's no different to shorting shares and then buying to close the position at a later date, which is also a capital gain/loss. "But options can expire worthless" I hear you say. True, but so can shares become worthless if the company goes bankrupt. The principle is the same.
I have only ever declared option premium (long and short) as a capital gain and have never heard of it being treated any differently. However, if you or anybody else have a different angle I'd be delighted to hear of it, as I would be better off having it treated as income.
Happy New Year.
Think of it this way - it's no different to shorting shares and then buying to close the position at a later date, which is also a capital gain/loss. "But options can expire worthless" I hear you say. True, but so can shares become worthless if the company goes bankrupt. The principle is the same.
I have only ever declared option premium (long and short) as a capital gain and have never heard of it being treated any differently. However, if you or anybody else have a different angle I'd be delighted to hear of it, as I would be better off having it treated as income.
Happy New Year.
PT,
I think there are too many issues/questions/interpretations regarding "ifs" and "buts" on this topic which won't be resolved via speculation. Regardless of what we think, the IR has the final say. It may be worth your while talking to them, especially re short options (I don't think there is anything ambiguous re long options).
Happy New Year, mate.
Grant.
I think there are too many issues/questions/interpretations regarding "ifs" and "buts" on this topic which won't be resolved via speculation. Regardless of what we think, the IR has the final say. It may be worth your while talking to them, especially re short options (I don't think there is anything ambiguous re long options).
Happy New Year, mate.
Grant.
kensfishbar1
Junior member
- Messages
- 15
- Likes
- 0
Does anyone find out at the end that option premium is treated as income or capital gain?
Thanks.
Thanks.
Several years since the last post on this subject, I have a related question.
With the changes in brokers requirements in dealing with their customers, I understand that from 01/01/13 brokers can only accept buy/sell instructions from their customers unlike up to now when they can discuss markets and trade ideas. I understand that the only exception is for the customer to declare him(her)self as a professional trader in which case conversations can be as before. My question is: are options trades profits/losses for a professional trader treated as income rather than CGT for a private investor?
Regarding the thread below, I was told some years ago by an HMRC trchnician that you can't be taxed on something that you haven't first bought or legally aquired and therefore tax can only be applied on closed options trades. Therefore at the end of the tax year, if you have sold to open options still open they can't be included in that year's tax return, but must be included in the following year's return.
With the changes in brokers requirements in dealing with their customers, I understand that from 01/01/13 brokers can only accept buy/sell instructions from their customers unlike up to now when they can discuss markets and trade ideas. I understand that the only exception is for the customer to declare him(her)self as a professional trader in which case conversations can be as before. My question is: are options trades profits/losses for a professional trader treated as income rather than CGT for a private investor?
Regarding the thread below, I was told some years ago by an HMRC trchnician that you can't be taxed on something that you haven't first bought or legally aquired and therefore tax can only be applied on closed options trades. Therefore at the end of the tax year, if you have sold to open options still open they can't be included in that year's tax return, but must be included in the following year's return.
