HMRC Tax returns

Hi All,

I’ve been trading stocks and shares since March last year and I’m wondering how you all go about completing your tax returns… Do you do it yourselves or have someone else do it for you?

I have a couple of questions:

1, do you have to complete a tax return even if you don’t withdraw any of your profits from selling shares?

2, how difficult is it to do your own tax return? I think I would probably end up paying too much tax as I wouldn’t know what I can claim for, if anything?

3, if for example I deposited £100,000 into T212 account and then withdrew £5,000 6 months later, would I have to pay any tax on the £5k? As I’ve already paid tax on the £100k, I wouldn’t have thought I would have to pay tax twice?

I’m new to tax returns so any advice would be greatly received :+1:

Many thanks,
Paul

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  1. the important bit is “selling” the shares, not whether you withdraw or not. selling is realising your profits or losses and this amount is what falls under capital gains tax. if your trades total more then £40,000 and you have profits above £12,300 you need to declare it to HMRC even if you don’t take it out of your account. this holds true for both the CFD and invest account.

  2. it isn’t too complicated depending on how many transactions you performed and if you are declaring losses to count against your profits for the year. HMRC provide a form and I am sure others in the community can provide links to useful resources, if you haven’t checked already via the search function in the top right of the page.

  3. you are taxed on profits, and yes you get taxed even if you have already paid taxes on the money before. because while it was taxed as income once paid to you, when you try to use it to make money, your earnings are further taxed as capital gains. similar to how you pay VAT on most items or services you purchase despite having already paid income tax on your salary et cetera.

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Thanks for replying Dao.

So I’ve bought and sold shares multiple times since March last year, probably ~100 orders. Would I need to account for every share sold that I made a profit on?

How would I work out what I need to pay tax on?

the tax year starts April 6th. so you would have to track all of your transactions and positions to calculate if your profits are in excess of £12,300, not counting losses as those are separate. if yes you will need to declare, but you only pay taxes on the excess not the initial £12,300.

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You really need to read the HMRC website if you think you only pay tax on withdrawal of funds.

Thanks.

As I’ve not been keeping a record / spreadsheet, I don’t think I would want to attempt this myself, at least not the first time round.

Could anyone recommend a good accountant?

you don’t need to make a spreadsheet yourself as you can now export all your transactions to a spreadsheet. (option is under account → history), you would have to make this to pass to an accountant anyway.

edit: an accountant usually does mine, but I will do my own next time so learning how too.

This is partially correct, but in the OPs situation I think it is wrong.(he has been buying selling since march, which is less than 1 year)

You can claim capital gains on stocks and shares if and only if you held it for a continuous 360 days(also look into exceptions for bed&breakfast rules). Anything less than that will incur income tax instead of capital gains tax, you’ll be taxed at your current income tax code And in any case you’ll need to declare the gains, even if they are under tax free allowances, the reason being the income from that gain can technically put you in a different tax band.

Years ago, I’ve contacted HMRC and asked them I made less than £5000 with dividends(when the allowance was 5K) and if I had to declare them. The answer was yes, although it was within tax-free dividend allowance it still potentially could put me into a different tax band.

Where in HMRC guidance is that?

I hadn’t heard of this either, but it is here Tax on Trading Income in the UK - Day trading taxes explained

Basically says that if you are counted as a ‘trader’ for tax purposes it will be income tax, otherwise it is capital gains. Not sure if anything in there is still up to date, couldn’t find anything on the gov.uk site after a brief look.

We are not considered traders, we are investors.

Where do you see that? Can’t find anything on the HMRC site and as per the info in the link, we may be classified as a trader depending on what activity we carry out

No, you classify yourself. Being a trader is like being self employed, you get all the benefits of that but your profits are income and not CG.
I will post some links when I sit on the desktop.

Ah ok thanks that makes more sense. I do everything equity in an ISA anyway so was just wondering out of interest.

I don’t know where it is, but you can very easily test and see it yourself by filling made up values in the calculator(you don’t need to submit them) on your self assessment, it won’t add anything you held less than a year to capital gains.

I might be wrong but there is no such thing as an investor or a trader as far as the tax is concerned. There are earnings(income or capital gain or dividend or what ever else) and means(stocks, salary, paintings gold…) for those earnings. Which are taxed (or free) depending on the means and durations.

But no one here is a tax advisor so you should not really trust us, email HMRC and ask, they are really responsive and very nice guys (usually) you’ll have a definitive answer in 2-3 days.

edit:
may be @Richard.W can point you out to a better resource.

https://community.hmrc.gov.uk/forums/customerforums/sa/f2c2cb61-8237-ea11-8454-00155d3bd04f

being treated as an individual or business is a totally different subject, in most cases being self-employed counts as individual anyway. Being an individual does not absolve you from income tax, in fact if you are like most of us (and not Richard Branson) most of your tax is probably income tax.

Then again please do ask Capital Gains Tax - GOV.UK

Thank you, I just wanted to clarify where you got that information. However, it wasn’t me who asked the question in the post.

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My apologies for not having the documented resource, in fact I think this should be the first thing that should’ve been documented on CGT page. But I have been filling self-assessment since 2002-2003 and I was just answering from experience. (which you should not trust, since I am a random guy on internet with keyboard)

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