UK Tax help!

[JayC1977]

Hi,

Just a couple of questions if I may. I am a UK resident and have been trading the US market this year with a small account and I'm wondering of folk in a similar postion:

1. Do you pay GCT tax or income tax?
2. Do you pay the above tax on your whole trading account value, the cash size in your trading account, or just the amount you withdraw from your trading account?

I appreciate very much any responses / help you can offer

Jamie

 

[MasterOfCoin]

Just a couple of questions if I may. I am a UK resident and have been trading the US market this year with a small account

... as you say 'small account'

You are probably outside the scope of being taxed on your trading by UK tax authorities.

Have you, or are you expecting to exceed £10,000 profit on your trading per year?

If not, then you will not be liable for any surprise taxes.

 

[JayC1977]

Thank you very much for responding.

My account is up about $5000. I assume from your response that CGT applies to trading profits?

 

[tomorton]

It depends on the type of account as to whether you are liable for taxation. If you trade via CFD's, you will be liable for CGT on the profit above the minimum CGT threshold. If you trade via spreadbetting, there is no tax of any kind payable regardless of size of profits.

 

[JayC1977]

Thank you, I trade neither of these though. I'm mostly trading option contracts and sometimes shares...
I have a cash account rather than a margin account if that makes any difference.

Thanks

 

[tomorton]

Profits from trading options contracts or shares in the UK are subject to CGT (unless the shares are held in an ISA or PEP - see gov.uk for more detail on this).

 

[MasterOfCoin]

. I'm mostly trading option contracts and sometimes shares...
I have a cash account

See my earlier reply.

Unless you expect to be making another 200% profit or more than your indicated cash figure, you will not come even close to being liable for CGT at current thresholds.

 

[JayC1977]

That's great news. Thank you very much, to all who helped me here.

 

[cam75]

Very useful posts. I'm exactly in the same positions and the answers are very helpful. I would like to ask a couple of more questions in regards.

If we remain under the CGT threshold do we still need to fill in a tax return declaring our profits?
Is it ok to trade shares, options etc..as private investor or do we need to register as sole trader/ limited company?

Thanks & Regards,
Cam

 

[mpups]

1 - If we remain under the CGT threshold do we still need to fill in a tax return declaring our profits?
2- I trade shares, options etc..as private investor, do I need to register as sole trader/ limited company?

1 - no
2- no

 

[cam75]

1 - no
2- no

Thanks that simplifies things for new starters!