FAQ for Tax in the United Kingdom

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84

Its not a loophole
You need to sell to realise losses or gains otherwise taxman doesnā€™t care
Thereā€™s also tax on dividends if you get over your allowance

85

I have updated the FAQ for Tax in the United Kingdom with new figures for 22-23 and 23-24.

The main changes, of which most will be aware, is that

  • the dividend tax free allowance for 23-24 is now Ā£1,000 (previously, Ā£2,000)
  • the capital gains tax free allowance for 23-24 is now Ā£6,000 (previously, Ā£12,300)

As the capital gains tax free allowance is reducing (and will reduce further to Ā£3,000 in 24-25), more people may start to pay it. The rate at which you pay capital gains tax on shares can be both 10% and 20% if your capital gains were to fall partly in basic and partly in higher rate bands.

You should think of your income as being layers of a cake. The lowest layer, taxed at income tax rates, consists of salary, property and bank and bond interest. The next layer up is dividends, and the top layer is capital gains. The rates change from basic to higher in the midst of whichever layer contains the value 50,271 (and from higher to additional at the income point of 125,141). The bottom 12,570 is tax free, except that once your total income exceeds 100k this allowance decreases by Ā£1 for every Ā£2 of income, disappearing completely when income reaches 125,140. Thus marginal income tax rate for people with salary 100,001-125,141 is 60%.

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86

Needs updating again now for share lending :pray::pray:

Iā€™m too stupid to work it out myself!

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87

I am not aware that we obtain any taxable/reportable gains or losses from share-lending.

88

We do now.

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89

Ah. Interesting. The share lending income you receive, as well as any payments you receive in lieu of dividends will be treated as income and can be reported on form SA101 at the additional information page, box 3. That is according to: HMRC Community Forums
https://community.hmrc.gov.uk/customerforums/pt/9da129ca-cd41-ed11-97b2-00155d9c9a65

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90

Are T212 lending shares from ISA accounts or just invest/CFD?

91

HMRC do not allow share lending in ISA accounts.

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92

Whatā€™s the deal with interest on cash balances within an Isa? Am I right in thinking it doesnā€™t count towards your allowance and itā€™s treated like any other income in your Isa? :thinking:

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93

Correct (I believe). 99% sure

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94

@TInvest 's right. Interest payments do not count towards the ISA allowance.

See here: Individual Savings Accounts (ISAs): How ISAs work - GOV.UK

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95

Bit off topic, I know but what about when french stocks are sold. Do we have any liabilities to the French state if they are held in an ISA?

96

You shouldnā€™t, but I think itā€™d be best to contact the HMRC directly for more info on foreign tax.

97

3 posts were merged into an existing topic: Fractional shares in an ISA

98

Whatā€™s the best process to calculate trades within a tax year from t212? Iā€™ve basically traded daily and made thousands of fractional trades.

Mainly I want to figure out if Iā€™ve disposed of more than the self assessment limit, and if I need to report gains/losses. Still going to be difficult working out which countryā€™s withholding tax applied, and accumulating ETFS that were held short term, and Thereā€™s going to be a whole bunch of bed & breakfasting and I think itā€™s going to be difficult to work out cost basis, but if you guys have a way to automate any reports or at least a spreadsheet template that will be great!
I feel like t212 should give tax year data within their app to help with the above, eg disposals per tax year, profit/loss per tax years etc (preferably accounting for B&B).

PS: if t212 is withholding 20% on interest, what tax is that and can we claim that back in a tax return? eg if my total income falls well within personal allowance, can we claim it back?

99

Are you aware that you can download a history of transactions as a CSV file and them analyse them as you like in a
spreadsheet?

From what you write, you are a UK taxpayer, right? Trading 212 do not withhold 20% on interest for UK taxpayers.

You might find this calculator useful for applying UK capital gains matching rules:

100

You can download history as a CSV file, choosing start and end dates that correspond to the UK tax year. From that you can easily compute whatever you want. I find this gives all I need. I supplement this with a spreadsheet of daily USDGBP exchange rates, so I can calculate GBP value of trades in USD shares when the trade has been settled from a USD balance.

Brokers typically do not do capital gains calculations for clients. One reason is that only you know what holdings in the same shares you might have bought and sold on other platforms and therefore what is your actual cost basis. I have used many platforms. None have attempted to do capital gains calculations for me.

A second reason, possibly, is that platforms do not want to have issues due to figuring something wrongly or giving erroneous tax advice. This might create a huge amount of work for the platform. Tax liability calculations should rest with you (and your accountant if you have one.)

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101

Thanks for the useful information. I wonder what type of tax I need to pay to interest incomes from a general investment account in Trading 212 - should it be dividend or just like interests from a normal saving account?

102

You will owe the tax rate applicable to bank interest. It is not dividends.

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103

I have updated the figures in this post. Please let me know if you think there are any things needing correction or further elaboration.

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