UK Taxation - Margin account

[lautbry]

If you have a margin account and trace normal stock only:
- You pay income tax on dividend (40 % - deduction) and interest (40 %)
and capital gain tax on capital gain (28 %).

You have some interest charge due to margin financing as well as some dividend paid charge due to short selling:

- Logically, the margin interest financing should offset your tax on interest and the dividend paid for short selling the dividend tax charge.
But it seems to be a charge to offset against capital gain tax and so if you have a lost you never recover it and end up to pay far more income tax on dividend and interest than it should be.

Is there in the UK tax report form a special case to put your short selling dividend paid short and margin account interest payment?
I do find the interest and dividend earning to declare but never the never the symmetric charge in UK tax report form.

 

[ns1000]

Assuming you're trading CFDs it's actually more straightforward than that. In essence, you're taxed on the difference between the value of your account on day 1, and its value on day 365 - assuming you've not taken any cash out. All profits, synthetic dividend payments and funding charges / credits are are aggregated. More info here http://www.hmrc.gov.uk/manuals/cg3manual/cg56101.htm

The whole lot is subject to CGT.

 

[lautbry]

There would be no issue for CFD. The issue is stocks as stocks are subject to 3 kinds of taxation:
- CGT
- income tax with rebate on dividend,
- income tax on the interest rate earned if the stock is borrowd and short sale.

What about loss on interest and dividend charge due to short selling ?