US Swing Trading / UK Tax

[Marek_$]

Hi,

I am a UK resident swing trading the US markets using the broker Think or Swim.

can anyone tell me the rules for paying UK Tax. I have filled out a W-8BEN from which means I don't pay US tax.

From the UK perspective is my trading profit treated as capital gains or is it treated as income? Is there a threshold profit I must exceed before paying tax.

I read somewhere that for Forex trading, your profits are treated as capital gains with a £10k per year allowance. Is this the same fro swing trading.

Thanks.

 

[tomorton]

I have filled out a W-8BEN

Who advised you had to do this?

 

[Marek_$]

Who advised you had to do this?

This is part is standard practice requested by the US brokers.

See https://www.thinkorswim.com/client/docs/forms/W-8B.pdf

 

[tomorton]

Thanks.

As I understand it, profits on assets disposed of, including outside the UK, are liable to CGT unless in a tax-exempt savings account like an ISA etc., and the threshold is currently £10,100. It would be worth clarifyng with HMRC that the forex assets you have profited from are subject to CGT on any gains. If they are, the means by which you gained such profits - e.g. by swing trading or day trading etc. is not relevant. However, the proceeds of gambling are not subject to CGT. There are now 2 rates of CGT, dependent on your total taxable income, i.e. including any other income that is subject to Income Tax.

You might try to have HMRC recognise you as a self-employed trader so that your trading profits will be subject to Income Tax rather than CGT. HMRC used to be very reluctant to do this, which might imply it's a good idea and would reduce your tax bill. Your area tax office should be able to advise.

 

[Marek_$]

Thanks.

It would be worth clarifyng with HMRC that the forex assets you have profited from are subject to CGT on any gains.

Thanks for the info. I should have clarified something, but it probably still applies. I am actually trading US Stocks not Forex. I read about Forex elsewhere which basically confirms what you said.

Do you think the same would apply to Swing Trading stocks? I guess it would.

Thanks.

 

[tomorton]

Shares will certainly be subject to CGT.

 

[anley]

It doesn't matter what you trade, profits and losses are profits and losses.

 

[Marek_$]

Thanks for the advice guys.

One last thing. If you make a loss one year - not that I would ever make a loss - can you carry the loss over to the next FY year. E.g. if I lost 100k at the end of one FY year and then made 150 k the next year then I would be 50k up so would I only be taxed on 50k?

Cheers.

 

[tomorton]

Although I've never made £150k on anything in a year, yes, I understand you can carry forward losses to offset against gains in subsequent years.

 

[Marek_$]

Although I've never made £150k on anything in a year, yes, I understand you can carry forward losses to offset against gains in subsequent years.

Thanks.