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.

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.

anyone have any ideas as to how cgt can be reduced for someone buying and selling on a frequent basis?? are there any items that can be claimed for e.g internet facility and computer??

Harry

you cant claim "expenses" against CGT such as computer/internet, these can only be offset if you are declaring trading as an income and being taxed purely for income tax (ie losing your CGT allowance). the only costs that can be offset are those which are clearly linked to the trade (ie broker costs/stamp duty)

if you want any more help give me a shout

Try this site for calculating your capital gains tax - I have used it for calculating my cgt over last 5 years and it really is quite good - it processed about 1500 trades and works out cgt liability etal - and its for free.


http://www.cgtcalculator.com/

Baza

Just used the above site to check my calculations and the only difference is where I've opened a short in one year and closed it in the next. The cgtcalculator treats the gain / loss as arising in the first year (with the opening sale) but surely it must be in in the second year (with the closing buy)?

Can anyone confrim please?

profit or loss, whether long or short is assessed in the financial year the trade is closed, so yes should be in the second year (the calculator must be working on when the sell takes place rather than when the position is closed)

Many thanks Fundamentalist

To claim a loss from previous years (04/05) do you just fill in the CGT pages for that year and send it in?

Also, is it still not possible to complete the CGT section online this year?

With regard to claiming losses from previous years, you have 5 yrs and 10mths from the end of the tax year the loss arose in to claim it. Assuming you didnt fill in CGT page for the previous year then yes id fill this in and calculate the loss from it. Id then include the loss on this years form in the box for "losses brought forward set against this years gains (box F6), youll also need to calculate whether youve used up all your losses or are still carrying any forward to future years (boxes 8.15 to 8.21)

Havent declared any CGT this year so am not sure whether its still unavailable online, though if you are claiming for previously undisclosed losses at the same time then i think youll need to go down the paper route with a short cover letter explaining that youve included the previous year page to declare losses not previously disclosed

Thanks again Fundamentalist

Mr Ripley - if you contact the people who wrote the software - they are usually very good at coming back with answers to your queries and telling you how to manage the problem. I think they have a contact us email address. I had a response within an hour for a query ?