I trade in stocks on a small scale, can somebody please explain if/when I will be liable for capital gains tax. Is the tax related to the total amounts sold or just to the profit made from the sales.

Any share that is listed on the FTSE market can be put in an ISA, anything on AIM or OFEX can't

Cheers, Fundamentalist. Now, is it worth becoming a Mormon and bringing a private members bill?

BTW rtd should trade sideways for a bit and then hopefully rise nice and steady.

pxc dead at the mo but may rouse itself nearer results prob June 20

Committed long term holder of RTD (see thread) - don't currently trade AIM stocks - as for the bill - wouldn't waste your breath - it appears that Gordon Brown wants to make ISA's less attractive not more - ie reduce dividend credit, reduce annual allowance

I'm well aware of your RTD thoughts - also a comitted long-termer. Thanks for your help.

Can anyone please recommend a reasonably priced computer program that works out Capital Gains?

Quicken tries to do it but matches shares the wrong way round, i.e. first in first out not last in first out. MS Money does the same. Neither of them know about the 30 day rule. Fairshares is very good but since Updata took them over the price has gone up from 80 to 495 (+VAT).

There is Stockmarket Investor 3 (129.95 + VAT) but I don't know much about it. Does anyone use this and if so is it any good?

Chandos

Wow - I do it the old fashioned way and it's much cheaper!

If you use a spreadsheet - some accountants may agree to do it for you (I would!) for a reasonable negotiated fee.

little woman

Thanks for your posts on all threads, which I have found helpful and interesting. I started investing 14 months ago and have only started using this bb fairly recently.

Can you help re your post of 21 Nov 03?

I thought the only reason one had to wait 30 days before repurchasing the same share was if you wish to crystallise a profit to offset against CGT. If this doesn't apply and you are going to remain well within your annual CGT exemption, then is there any reason that you can't repurchase the same share on the same day? You're not saying it's prohibited are you?

I have looked at IR 294 as you suggested, but isn't it IR 284 that's more relevant? Still couldn't find the relevant passage though - probably because IR helpsheets always induce a state of sleep in me!

Many thanks

Madison

Madison,
My understanding is the same as yours. Below is an excerpt from comdirect:-

Gains can mount to a significant level over time and taking advantage of the annual allowance can save a lot of money in the longer term. It used to be possible to "bed and breakfast", where a stock was sold one afternoon and re-purchased the next morning in order to create a paper gain or loss, thereby taking advantage of the allowance. This practice was stopped by Chancellor Gordon Brown, who extended the matching rules to 30 days. Investors must wait 30 days before re-purchasing if they want to take advantage of the tax allowance.

Matching Rules
The matching rules operate in the following order:

Stock purchased on the same day as sale

Stock purchased within 30 days of sale on a First in First Out (FIFO) basis

Purchases made between 6 April 1998 and the day before sale on a Last in First Out (LIFO) basis

Stock acquired between 6 April 1982 and 5 April 1998 on a pooled basis

Stock acquired before 6 April 1982 on a cost as at 31 March 1982 or actual cost

I'm sure somewhere I have written an excel spreadsheet to calculate CGT liability, taking account of the matching rules etc.

I'll dig it out if any one is interested.

neilpos,

Thanks for your reply.

Would still like clarity from someone that repurchasing a share sold earlier in the day is not in itself prohibited.

Don't worry Madison, no one is going to put you in jail for that :-)

My main problem is/has always been, finding out the year in which one can claim losses on companies which have failed. Does anyone know of a list, or source of information, please.
Also re posting no.1. I think the tax year ends on 5th April not 4th.

My question is, how omn earth do all the day traders keep a tally on the CGT due on their miriad of trades? Do you take account of the 30-day rule?

Sorry I've not been watching this thread.

Flatbrokeagain - the 30 day rule is makes no difference to day traders.

The 30 day rule is to establish dates for taper (and any other allowable) relief. Day traders do not hold shares long enough to claim any allowable relief so applying the rule is a waste of time.

Madison - you're right - must have pressed a 9 rather than the 8! It is IR284.

I think my answer in the previous post may help your question.

You may find - but you need to check this - that if the revenue consider you to be a frequent trader then you will be taxed on your overall trading profits rather than for CGT on each transaction. I'll check the rules and come back to you.

Actually they won't. The reason they won't is to do with the gambling laws. If the revenue allow it to be treated as trading profits then they would have to also allow trading expenses. The Revenue do not believe the majority of people can make money trading, and therefore don't want to be put in the position where they would have to allow trading losses.

There has been quite a lot about of this in the Press last year - and I know it was discussed over in the traders room at the time.

This was my original post over in the traders room last year:

Thought you would find this interesting (Suggest you print out the orginal article in case you need it for a rainy day!)

Revenue's confusing share trader status policy

The Revenue is under fire for its policy towards individuals who actively deal in shares.

The Times (http://www.timesonline.co.uk/article/0,,5-799349,00.html) reports that active traders risk surprise tax bills because they may be treated as sole-trading businesses rather than as private investors. However, some regular share dealers who say they would prefer to be taxed as a business are being denied the chance by the Revenue.

The Times cites the example of Sion Roberts, who has been dealing actively in shares since 2001, but has been refused sole trader status by the Revenue. He told the paper: "I have been dealing as many as three or four times a day and have notched up turnover of several million pounds a year. I have even set up my own dealing company and regard myself as a sole trader but the Inland Revenue insists that I am a private individual making capital gains."

Mr. Roberts added: "In the past two financial years I have made some substantial losses which, if a sole trader, I could offset against other income. As an individual I can only offset these against capital gains, which have been few and far between."

Maurice Fitzpatrick of Numerica questioned whether the Revenue's dogmatic approach might change in a bull market.

A Revenue spokesman explained: "Our general standpoint is that active traders are considered to be individuals making capital gains. It is up to those who wish to be classified as sole traders to prove that they do not fall within the category of individuals making capital gains. This has been our position for some time and we are not moving the goalposts on this"

Sure your right, but see the comments from David Gibbs, tax partner at Grant Thornton, in the recent times article.

http://business.timesonline.co.uk/article/0,,9561-1007352,00.html

I should ask my Sis' - she works for the enemy.

No hate mail please.

:-)

The thing about being doing tax work, is that you tell clients things to scare them, even if it's not strictly true. (Because in your defence "it could be" even if you know it's not!)

A large tax practice I used to "contract to" until recently had a couple of clients who declared that they were day traders, and submitted tax return on that basis. It was after the 3 return, the revenue came back and refused the trading status, and the firm made a lot of money undoing it all and correcting under CGT.