I need help with capital gains tax

Help
#1

Hi im 18 and i have never paid any sort of tax.
I was wondering how much capital gains tax i would have to pay.
Its an Invest account as the stocks are not available in the ISA

I invested £6,895
The value of shares i am selling is worth: £ 27,953
My current income is something like £5000 (part time).
I was wondering how much CGT i would have to pay

Also if i do not withdraw the £27,953 from my T212 account after selling but quickly invest it into another stock, could i hypothetically avoid paying tax - as the government wouldn’t know about my gain (hypothetically ofcourse).

Please help- Thank you for reading - sorry if this is a noob question

#2

All explained here. You probably owe 10% on your gain over £12,300.

The hypothetical question is about doing something illegal called tax evasion. I think it is a good habit always to pay the right tax. You will sleep better and know you are helping pay for things like schools, vaccinations, and supporting those less fortunate.

You have until 5 April to make some losses and those may then reduce your tax. But it’s not something to seek actively to do. :slightly_smiling_face:

#3

What happens after the 5th of April

#4

And what about me putting the money into another stock, the reason I aimed to make money from this stock to help fund another stock I wanted to buy. Could I not just buy the other stock straight away after selling ?

#5

The tax year ends on 5 April.

No you cannot just reinvest in another stock. You have to pay any taxes due on gains in the first stock you sold. Where you put the proceeds is immaterial. It is the same as if you bought a property to let, sold it and then bought a new property.

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#6

It doesn’t matter if you reinvest gains into another stock and just circulate funds constantly around that way. With every sell you will be taxed on the profit gained.

#7

Trading 212 does not deduct tax. Only they would be aware that I sold. Would the government know that I sold if I do not withdraw the money into my bank account - could they tell that now I have a certain amount sitting in my trading 212 account

#8

You are asking for advice about tax evasion, which is illegal. That is something you should not do and will not get any advice in a public forum.

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#9

I’m asking about what is allowed and what is not, I’m trying to understand if the government sees that I have sold, if ofcourse they can and I choose not pay tax that is tax evading. I’m just seeing if there is a legal loop. - If they cant tell that I have sold , then it comes down to the persons honestly when declaring. I’m allowed to ask questions about tax considering it’s coming out my own pocket - I think asking questions is the whole point of democracy and not doing things blindly

#10

A clear answer was given by @Richard.W and @Jonnym above.

#11

There is no loophole. You are responsible to pay the right tax irrespective of what records are or are not sent to HMRC.

HMRC can ask you and Trading 212 to produce records at any time and can investigate backwards 20 years. But they cannot audit everyone and so people do get away with tax evasion.

HMRC is presently rolling about a programme called “making tax digital” that will involve more automated reporting and make tax evasion on capital gains more difficult.

#12

Oh ok so in the future it might be automated - I’m guessing that would be much easier - thank you for the help

#13

Yup there’s no loop hole. Taxes comes hand in hand with stock investing. Profits made will be charged at whatever your country’s CGT amount is. Depending on where you are there might be a certain threshold that you’re allowed tax free, but apart from that just something you have to take it on the chin.

#14

Brokers do currently send HMRC some information about client accounts. I am not sure precisely what.

I don’t really need to know what HMRC knows. I just assume they know everything.

#15

I heard that the cgt will pushed to 45 percent - wouldn’t that just discourage new investors - my favourite stocks aren’t even on this ISA - also why aren’t some stocks included on the ISA?

#16

@Richard.W has put it in very nice terms. Plain and simple don’t bother try it. Bank firms have to report such information about their customers annually. I’m not an expert on brokerages but as they are FCA regulated I can imagine they have similar duties.

Also bare in mind that getting caught isn’t simply a matter of paying what you owed. You would be fined a penalty and also accrue an interest liability against your outstanding tax.

#17

To be in an ISA the stocks must trade on a recognised exchange. Some Chinese stocks do not.

It has been mooted that CGT might be aligned with income tax rates. That 45% would only apply to people with income of more than £150,000.

#18

Also to note the HMRC will most CERTAINLY be checking with brokers this year with the large increase in traders making large profits off the current markets volitility.

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#19

Luckily my incomes low - I invest in the NIO , the ev company. They trade on the nasdaq but apparently they were once in the isa for t212 but it was removed. Are companies ever allowed back on or do they stay out of ISA

#20

There have been some companies that had incorrectly been marked as ISA compliant when they were not.

Once this error became apparent to the T212 team they acted swiftly to move these stocks to invest only to comply with current regulations.