Capital gains tax

There is no demo page. But you can register and look at the 2019-20 pages without any commitment to actually use them.

In my experience HMRC tend to be forgiving. If you owe no tax then I expect there would be no penalty for failing to report sales over 49.2k. But you would probably only be forgiven one first year of mistake. But why not report? I find it a good way of annually reviewing my financial health and plans. Someday you are probably going to have to report. Why not learn about it now?

HMRC are responsive to questions put in direct messages to them on Facebook.

We were discussing whether you need to complete a self assessment tax return because of stock sales. Here are the full rules.

You have capital gains to report where:

  • You have given away or sold assets worth £49,200 or more for 2020/21; or
  • You have a capital loss but your gains net of any losses are more than the annual exemption for 2020/21 of £12,300; or
  • You have no losses to claim but your gains are more than the annual exemption for 2020/21 of £12,300; or
  • You need to make any other capital gains tax claim or election for the year.

I think it is clear that if you have stock sales totalling over £49.2k in the year then you are required to complete a self assessment tax return, even if you will have no capital gains tax due.

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This bit is where I am confused.

Do I pay taxes on the absolute gains, so 40-12.3K ? (I remember reading that somewhere…) or do I pay taxes only the gains - losses above CGT allowance ?

Completely clear on the advantage of offsetting in the next years… just unsure about the taxable amount… is just made of gains or gains - losses ?

==== EDIT ====

In this PDF is written;

your chargeable gains before taking off any losses
were more than £12,000 (‘annual exempt amount’)

Is this just a requirement/criteria for you to fill for self assessment and nothing to do with the taxable amount calculation ?

Yes, just a requirement to complete self assessment. You are taxed on

(gains - declared_losses - 12,300),

If you have losses then your aim should be to declare enough losses so that this is 0 and then postpone declaration of any additional losses to a future year. Of course if your gains - all_losses > 12.3k you will declare all losses.

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Hi @Richard.W,
if I just traded between the 20 and 21 tax year and I don’t intend to trade anymore until April 2021, can I report now ? or do I need to wait for the tax year to end, and report anytime between April 2021 and Jan 2022 ?

Sorry silly questions, but wanted to double check.

Thanks!

Hi @dropbrick The self assessment forms for 20-21 do not come on line until 6 April 21. For now you can only find forms for 19-20.

Just keep your own records safe in a spreadsheet, ready to translate over in April 21. That’s what I do.

Hi Richard, sorry to piggy back this conversation. I had a doubt about what total number of sales means. Currently I’ve been buying and selling multiple times - speculating in my invest account over a period of hours (not scalping).
In total of those large trades say 6k of buying and 6k of selling with small profits in between… in a day I’ve made 200 USD in total…
how are the sales calculated? I hope it’s not the individual trades I’ve been making I’ve literally just been selling the same thing I’ve bought but with small profits.

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My understanding is that every sale is a sale and needs reporting. For CGT calculations sales are matched first against the cost of purchases made the same day.

However, I have never done as you with many trades per day, so have not researched this. I suggest asking HMRC via a message on their Facebook page. If you do a lor of short term trading there may become a point that tax treatment is different.

Hi Richard,

Would the interest of holding onto CFDs count as a loss against the gains?

For example:

I invest 1k in a CFD. After a week I sell the CFD and make £10 profit on sale, however because I held it for so long so the interest payments stacked up to £10. Therefore overall I technically didn’t make any profit if interest payments are deducted. Or if I sold the cfd at the same price I bought it (ignoring the spread for simplicity) so it would be breakeven if I don’t include the interest or a loss if I do take interest into account. Can the interest payments count as losses?

From HMRC website

Deduct costs

You can deduct certain costs of buying or selling your shares from your gain. These include:

  • fees, for example stockbrokers’ fees
  • Stamp Duty Reserve Tax (SDRT) when you bought the shares

Not sure if interest is considered as broker fee.

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Yes. Interest charged a on CFD position is deductible from gains. Read the last paragraph here which gives clear instruction on this point

Notice that dividends paid on a CFD are taxed as captial gains, not as dividends.

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I’m stumped about what to put in the CGT Disposal Proceeds box on self-assessment. I buy and sell CFDs regularly and have carefully worked out annual gains and losses. As it happens, last year losses outstripped gains. On my broker’s printouts it simply has the profit or loss for each trade. There is no mention of what the theoretical deposit was or the margin. So how on earth do I work it out when I can’t tell what the deposits were? Also, what does in the allowable costs box?

Finally, say I open a position with two CFDs on Wall Street, so I make or lose two dollars for each pip up or down, how can I quantify what a deposit is for that?!

Thanks

Hi @Richard.W.

Ok I started to trade between June 2020 up until now and want to continue trading.
I have a part time job as well and by April 2021 with the earnings from trading I will go over 12300 pounds for sure.

So my question is please: when do I send HMRC what I have gained let’s say up to this point ?
Before December 2020 or before April 2021?

Thank you in advance.

@warhammer23 You will compute your tax for April 6 2020 - April 5 2021 on a self-assessment tax return, due by January 31 2022. At 31/01/22 (or sooner if you wish) you pay any tax due, plus 1/2 of estimated tax for April 6 2021 - April 5 2022. The second half of estimated tax is due 31/07/22. Estimated tax is for tax on income that is not covered by PAYE (such as bank interest, dividends and property income), but not capital gains. The estimated tax is computed on the basis of what you owed for payment at 31/01 in the previous year.

I hope that makes sense. I find the online self-assessment forms are quite easy to complete.

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Thank you so much @Richard.W !

So basically by the end of this year I don’t have to send anything over, because my new gains from this tax period April 20/21 have to be declared by Jan 2022.

So far 212 sends me monthly statemets which clearly show the overal gains and losses. Will those be enough for HMRC?

That is right. Your first declaration will be by 31/01/22. You will not directly submit the statements from Trading 212 to HMRC. Rather you retain these as backup proof if HMRC were ever to ask you about the figures you declare in your tax return. On the return itself you will type in numbers for each sale in regard to: cost, sale proceeds, dates of purchase and sale, any deductible expenses and then compute your gain (or loss).

The online forms for the tax year 20/21 will be available to access on the HMRC web site from 5/4/21. You will want to register for self-assessment online.

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You are a life saver Richard. Thank you so much! All the best.

Hi @Richard.W . Trading212 charges 2 things that I think are deductible.

  1. Interests - these are visible in my interest report.
  2. Spreads - clearly when you buy at a price X it applies a spread hence you can’t immediately sell at the same price with 0 loss.

Can you confirm and help me identify how can I export this from the system?

I have no interests report in my email, nor can see spreads anywhere. Re-typing it manually for my 500+ transactions from the website/mobile app would be a nightmare.

Spread is not a tax deductible expense that you would separately calculate. Your gain is simply the difference between proceeds on sale and cost of purchase.

If you are talking about CFDs then overnight interest can be deducted as a cost. You can find how much interest you paid in the History section of the app.

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Probably the most patient and helpful person I’ve come across in this platform. reminds me of certain someone over in LSE board. Might drop in a query or two (will most likely be a million) in future. Top gent

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