With the current increase in the market I see Cryptocurrency as ultimately becoming a reserve currency for banks, playing much the same role as gold did in the early days of banking. Banks could issue digital cash with greater anonymity and lighter weight, more efficient transactions
If it hadn’t been with the help of my broker Mr. Rose Gardner whom I can’t thank enough, I would have completely given up on the crypto market after loosing so much money
Oh my, a bit surprised to know you work with her, I just received my ROI into my wallet through her platform and I am pretty impressed by her strategies
wow you invest with Mrs Rose too? I never knew she was much of an experienced trader, been on her telegrm for a while now but was skeptical, guess I’ll have to check her out again because I’m frustrated having to lose money, I need a trusted broker with experience
Great Video, easy to follow. I was never confident enough to do a General Account, as I had already maxed out my ISA and SIPP tax year, and had no idea about CGT. But this year I have put any spare cash in to an General Account Vanguard S&P 500, and plan to sell off 20k then put that into my Vanguard ISA 6th April. Looking at this video I can see unless the markets go mad, I will never pay CGT doing that each year, or at least for a lot of years to come.
I'm glad it helped. Yes that's a good approach to make the most of your allowances and even if the markets do go crazy you can always just sell off a bit less so that your gains don't exceed the CGT allowance in a tax year.
@@trader_uk1446 Yes I am probably going to do that, as on April 6th I will lump sum 20k into my ISA and then max what I am allowed into my Pension, then see what is left over of my CGT allowance and decide what to do
This is fabulous content - thank you for making it so clear and easy to understand and freely available! I have a question re: selling shares in a GIA and buying shares in an entirely different company on the same day. Is this still considered investing rather than day trading or is there any declarations I would need to make to HMRC specific to this? Thanks for your help
Say my salary from my job is £2,000 a month or £24,000 a year. This is automatically taxed, so i don't need to worry. If I invest and make a profit of £12,500 do I still have £12,300 allowance, but have to declare tax on the £200?
Yes you would still be entitled to the £12,300 capital gains allowance no matter how much you earn from you employment. In this case you would only pay tax on the £200 in excess of the allowance.
Thank you for this video! Really informative! Upto now I have never been involved in my tax obligation as I m an employee and everything is automatically paid! In the case that I invest and (hopefully) be subject to capital gains tax, how HMRC would get to know that the capital gains plus my income are above 50k? Should I declare it again even if this has been in their knowledge by other route!? Is there any risk to be double taxed on income if I declare it myself in order to provide all information to HMRC?
Does anyone know if the special rules apply if two different versions of "you" (i.e. separate entities) buy & sell the shares - in my case it means "me" selling shares from a investment fund, and my ISA fund with same company buying them back (usually on the same day, for the same price). With CGT allowance falling to £3k this year, you only need to have made ~15% gain to exceed that when shifting £20k into an ISA. Also, re working out the total cost of buying the shares, if you have accumulation shares you can add the annual dividends (not paid to you as cash, but incorporated into the share value) to the "cost" of buying your Section 104 holdings and so reducing your CGT.
On my tax statement from broker trading 212 are 25903.12£ profit, loss 18816.46£, total gain 6903.72£ interest - 61.67£, fee 121.27£? Do I need to declare capital gains? Please explain to me
This is exactly what I was searching for, thank you so much! I want to declare a loss made in 2018 in the current 2021 tax year (since it has 4 year timeframe allowed) but where would I fill it in, in the self assessment form please? In the current year calculation section as you have described in the video, with the disposal date as 2018? Thank you
Hi, thanks for the video. I use trading 212 and on the history section it gives you a figure for your result, which is your gains minus losses, and you can export the history to an excel sheet. Can we use this result as our final profit/loss figure for HMRC? Or are there rules that apply that would make the simple figure of total profit/loss incorrect? Thank you
You need to take into account the 'same day' and '30-day' rules, unfortunately. It seems like madness to me. Oh, you might be in the US, in which case I don't know.
Hi there, I have a question specifically regarding Copy Trading on stocks are shares (such as on eToro), as I’m unsure at which point tax is payable. Consider the following scenario: - You initially invested £100k with a single copy trader (who for arguments sake trades stocks and holds them for 6 months on average) - Fortunately you make £50k profit in a year, of which £25k is realised profit and £25k is still in unclosed trades - All £150k is still invested with the copy trader and you have not withdrawn any funds or closed the copy Please could anyone confirm which of the following is correct in this scenario? 1. Capital gains tax is owed on the £25k in realised profit (minus annual CGT allowance), despite the fact it is still invested with the copy trader. 2. CGT is only due on the total profit once the copy has been closed and funds returned to you, so all funds may be left invested with them long-term before tax is due. 3. Both wrong/another option?! Any ideas? Thanks
Great work man - thank you for tackling this topic! This video has been very informative. I have a question though: Let's say that in the current tax year you've made £10k gains from trading shares, but you've also incurred a £2k loss from some unprofitable investments, essentially making it a £8k profit for the year. Can I use the £2k loss to offset future Capital Gains over the course of the next 4 years or, since my total for this year was a gain, I've essentially defaulted my opportunity to use the £2k loss in the future? I guess the better question is: Does your Total Capital Gains need to be negative for the entire tax year in order for you to be eligible to claim the loss in a subsequent year? Or, as long as you did not have to use this current year's loss (£2k in this example) to bring your CGT down, it's okay to carry that over? Thanks a lot!
Good question. Unfortunately any losses must be offset against gains in the same tax year first. If they reduce the gain to zero then you can carry forward any excess. So in your case you wouldn’t be able to carry them forward. If you do carry a loss forward though it then becomes more flexible, in future years you can use your loss to reduce a gain down to the 12,300 allowance.
Say you made losses in the previous year but didn't declare it on your tax return from share trading, how do you include it on your current return. Do you itemise the trades from the previous year and include the current tax year gains and losses in the document and how do you do it?
Having to do these horrendous calculations - and running the very real possibility of getting them wrong and having HMRC snapping at your ankles - well . . . . is it worth it? Stick to ISAs.
Usually no, there are some rare circumstances where you’ve also made big losses which are reducing your gain below the limit but in most situations no.
Hi, I have question on Income tax for a self-employed sole trader/day trader, is there any difference on matching rule calculation with the CGT calculation? ie: B&B rules, 30days rule, last in first out etc. Thanks for ur help!
Thanks for the video. Where do I have to claim for deduct certain costs of buying or selling shares from my gain? Like fees, for example stockbrokers’ fees
Great video, but think am being thick. I have a gain of £1,300 and bought and sold the same shares on the same day and also sold the same shares bought at various points within 30 days. None of these with 30 days either side of April 5th. Because my gain is £11,000 under the limit for capital gains tax...do I have to worry about 'bed and breakfast' and same day disposal?
My employer gave us shares as a company incentive when it went public. What scenerio does that fall under as I didnt buy them directly. We also got taxed in November through Stock Options Clearing - this is refers to the balance of the stock value less the tax applied at the rate of 45%. HMRC have already taxed me at 45% If i sell the shares do I still need to declare it? the shares are in the US
If I decide to sell some shares/crypto which sum to > £12,300 CGT allowance and give X amount of the Capital Gains proceeds to a UK registered charity, could I leverage this to reduce my Capital Gains tax bill and declare this within 23:12 of the video 'Deduction, if any, in respect of reliefs and elections'? If yes, would I need to show/attach the proof of proceeds going to the charity? Really appreciate your content, great video! Quite new to this area.
Im right now at the page trying the find the capital gains tax column but I dont see how you got there ... is it under paye section ? I dont know where to go from the gov page where im signed in
I have a question perhaps other viewers had already asked before. What if I just buy (invest very long term) stocks and never sell (keep for my family). Am I correct to assume that the value of my portfolio will not be marked-to-market and be subject to taxation? Even it has appreciated 5-10 folds. Is captital gain tax only payable on disposal? Many thanks.
Hi need to ask one thing. I am self employed and I already fill a self assessment form. In this case even my dividend capital gains are below the allowance values, I need to report them. Am I correct? And one another thing I am confused is, I actually kept the profit in my broker account and did not transfer anything to my bank account. (Just purchased another stock with that little profit) Do I still need to report it even though it had never hit my actual bank account?
Thanks for your sharing this video. May I ask how about if we have several shares were sold for the year, should we fill up the capital gain one by one or just provide a spread sheet with full calculation of the total gain of the filing to HMRC?
Thank you for the video, it’s very informative. I’ve got a question about the bed and breakfasting if I may? If I sell all the shares of say Tesla I’ve acquired over sometime and use section 104 for the computation. I then buy them back within 30 days and sell them all off in say 10days time, I will just have use the cost of purchase 10 days ago to work out the gains right?
Example (1) buy 100 tesla throughout 2017 (pool as section 104) (2) sell 100 tesla on 01/04/2021 (3) buy 100 tesla on 10/04/2021 (4) sell 100 tesla on 15/04/2021 In this example there are 2 disposals. The first would be calculated as (2) - (3) because the shares were repurchased within 30 days and the second would be (4) - (1). I hope that makes sense. In this example apart from shifting the gain into a different tax year the over all impact might not be significant but for most people they actually continue to hold the shares rather than selling again under step (4) and the b&b rules basically stop them from realising a gain.
Excellent video many thanks. Why would someone do the first option of the 2 you show as you might have to it again at some point in the year? Why not just wait and do it at the end of each financial year (option 2)?
Well if someone is in full time employment for example then they wouldn’t usually submit a tax return. The real time reporting allows them to declare the gain without committing themself to submitting a tax return each year when they otherwise wouldn’t. You’re right though, if you’re already registered for self assessment it’s obviously better to declare on there.
@@trader_uk1446 thanks for the reply, it's much appreciated. What do you do if you have enough stop working, would you suggest doing it at the end of each year? Cheers again 👍
Thank you, this was a great video! I have a question though: if you decided to be an investor full time (so, this is your only source of income), would you still work out your yearly tax this same way? Or would you have to fill another section of the self-assessment? Thanks, I hope you can help
Well if you were operating it like a business technically it could become a trade and therefore be taxed under income tax rules. You would have to then fill out a self employed section of the self assessment instead. I’ve read some guidance from HMRC on this and it usually takes quite a bit to convince them that it should be treated like a business which is in your favour as capital gains tax rules are far more beneficial for you.
@@trader_uk1446 I hope that's what happens when it comes to it haha. The thing I'm confused about though is what warrant it being operated like a business? As oppose to just buying and selling shares
Can you do one of these videos on CGT in crypto investments. I have a good idea how this works, but not 100% using the same scenarios would be great if you get time fella. Good video, subbed and liked for you..
@@trader_uk1446 Thanks, do you agree crypto is treated exactly the same as shares when it comes to calculating, including the breakfast rule you mention.
Thanks for the step by step video. I have realised the video at 25:50 with "payment due by 31 January 2021". When is the cut off period for the new annual CGT allowance? I thought it will refresh on the 6 April (new tax year)? Please advise. Thanks again.
Yes, the liability would need to be paid by 31 January if reported on a self assessment but the allowance refreshes each year on the 6th April when the new tax year starts.
Quick question - Say if I make 100k gains on my investment - can I take £12,000 each tax year to avoid taxes. As in sell shares which adds up to £12000 2nd question Do I get taxed if I trade on my Isa account and it’s a us stock? 3rd question Holding a stock for more than a year and selling all of it does it help paying less taxes or still the same? Thanks
1.) Yes you can realize up to £12,300 of your gains each tax year to reduce your tax liability. You can sell as much as you like providing the gain doesn't exceed £12,300. 2.) No, US stocks held in an ISA are not subject to tax. Both the gains and the dividends are exempt 3.) It doesn't really matter how long you hold the stock. You will get taxed at the point of disposal. I think in the US they have different rates when you hold an asset for longer than a year but this doesn't apply to the UK.
with etoro you can close specific trades one at a time (if you bought 10 shares at £10 and then a week later 10 shares at £11 you could just close the £10 trade) In this case im assuming you can just work out your profit/loss per trade which it tells you and do it this way? Is that right or am I on the wrong track
Unfortunately no. I use etoro and have noticed this too but HMRC require that you pool the shares under what they call section 104. If you read this guidance it states that you shouldn’t recognize the disposal of any particular shares from the pool. Just use an average price. www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg51555
How do you determine a 'weighted average' price for your section 4 holding? How far back do you have to go? Is it a matter of just averaging enough purchased shares to offset the disposal?
The section 104 will contain all shares that haven't been previously disposed of so you have to go all the way back to the first purchase to get the correct weighted average
@@trader_uk1446 thanks for the reply. Do you mean the first purchase that has not yet been sold off? If I sell all my shares at some point, and then reinvest as I go, I presumably won't need to go back before that date?
WHERE IT SAYS ' did you dispose of chargeable assets worth more than £48000' do they mean total amount including original principle or just profit before allowances?
On more complex issue, been buying TSLA for a few years, sold some the day they joined the S&P500, just bought half that number back today. New ones cost more than the one I sold so how the he'll does that work man!!! Help please
In that case you still use the acquisition cost from the purchase you made within 30 days of the sale. This will result in a loss on the half that you purchased back. The other half you can pool together the earlier purchases and take an average cost. This will most likely result in a gain for the other half of the sale. Add the gain and the loss together to get the total taxable gain.
No, if you are offsetting capital losses against future gains then there is no limit. In the US i know they have a limit ($3,000 i think) but i believe this when you are offsetting capital losses against other income such as employment or self employment
Thanks for your videos! Quick question (with a possibly not so quick answer): what if your broker allows you to keep a separate account for each currency, so you don't have the GBP figures for each trade? Which FX rate should be used, assuming you have multiple trades in different times of the fiscal year? Are you aware of any brokerage firm that simplify the tax return for you? Thanks
you can use the spot rate on the day you made the purchase and disposal to determine the gain. If you google HMRC historic exchange rates you will find publications of exchange rates you can use. To be honest the brokerage can’t do much to simplify the return apart from provide you with reports because everyone’s tax situation is different.
@@trader_uk1446 Thanks a lot. I was looking further into it this morning and I think I found the rates you mentioned. I'll leave them here for future reference: www.gov.uk/government/publications/hmrc-exchange-rates-for-2020-monthly www.gov.uk/government/publications/exchange-rates-for-customs-and-vat-yearly Correct me if I'm wrong, but as far as I understood, HMRC is pretty flexible with the rates: we could either use the yearly averages or the monthly ones, so long as we are consistent with it. Many thanks!
You would calculate any gain made on the 4th April sale using the original acquisition cost (hopefully this will be covered by your capital gains allowance so you won’t need to report or pay tax on anything under £12,300) Once you buy back under the protection of an ISA the asset is completely shielded from tax so doesn’t get considered for bed and breakfasting rules. i hope this helps 👍
Hey bro great video, I watch some US-based investors in regards to the stock market however haven't seen many UK-based ones happy to be subscribed to the channel from early! I have a question for you if you don't mind, honestly, these CGT rules in regards to the disposal (shares acquired on the same day/bed and breakfasting rules, etc) are really confusing me and freaking me out! What's the best way to go over the 2019/2020 trades is there some sort of calculator you can punch the numbers into that you use or anything or do you by any chance happen to do tax returns yourself for a fee for others or can you maybe point me in the right direction?
Are you making a lot of trades then? (this tends to be when it gets confusing) I don’t hold too many positions so mine is pretty easy to stay on top of. I will try and get a video done about how to keep track of the trading with a simple excel spreadsheet. If you can’t wait and you need assistance I would recommend Aidhan Accountancy. I used to work for them in London and they were always reasonably priced.
I actually looked at this previously as someone else asked the same question. I believe forex gains are usually taxed as capital gains but just note if the gains are made from spread betting and you are an amateur trader (I.e. hmrc don’t consider what your doing as a trade) then the gains can actually be tax free as it’s viewed in the same way as gambling.
Hi, I work for a company ( I pay taxes as PAYE), my question is: Can I still register for Self Assessment, to report my capital gains that I made in my Invest acccount, to HMRC ? Please Help !
Yes you can or you can use the real-time reporting service for capital gains which should prevent you from needing to register for self assessment. remember if your gains are under £12,300 you don’t usually need to report them or pay any tax.
@@trader_uk1446 So if my annual income is £20,000 say (so I already get taxed) but my investing income is less than £12,300, i DONT need to pay extra tax?
Great video. If you make on average 5k a year in your investments but cash out after 5 years and making a 25k within the 5 years. Will you have to declare this then? or will this be averaged from 5 years?
No the gain would all be recorded in the year you sold so it’s better to sell up a bit each year to realise the gain over a longer period and avoid tax. Just be careful of bed and breakfasting rules (basically don’t buy the stock back for at least 30 days)
Hi Trader_uk, Can I ask about the Computation sheet? Since I have done some day trading I have many transactions. So is there an HMRC approved Day trading computation excel sheet or should my broker format my trades for the tax year? I find this a bit daunting atm any links to any sample sheets would be greatly appreciated. Thanks CK
Hi, very informative. I also do have two questions and hope you can assist on this simple question. I am an employee of XYZ company and a basic tax rate payer with below £50,000. HR does all those paperwork and that I pay the relevant NI and Income Tax, etc. I just opened a general investment account that is generally subject to CGT. I invest in shares that is worth less than £1000. Do I 1) Still need to fill in that form if I occurred a £1 gain from disposal or sales? 2) If I made a £1 loss from acquisition cost. I may wish to bring that forward but I do not need to report it as a made a loss than a chargeable gain on disposal? Thanks!
No, at the moment you would only need to report to Hmrc when your gains exceed 12,300 in a tax year. If you want to carry the loss forward you can but I wouldn’t worry about reporting the loss yet, you have much longer to do this (I believe around 4 years to report losses). So I wouldn’t do anything just yet
@@trader_uk1446 Perfect, thank you. I guess I confused myself with Annual Exempt Amount as the same as Personal Allowance because both figures are identical.
Great content! I have a question: If you buy Shares from a foreign country eg. The US. Are there any taxes due for the US and or any additional taxes other than Capital Gains Tax in the UK? Many thanks.
The US apply a withholding tax to dividends paid by US companies to non US residents. If you’re from the UK this is usually 30% that gets withheld but if you sign form W8-Ben on your trading platform it gets reduced to 15%. There would be no capital gains tax payable in the US. As you are a UK resident you will pay capital gains here (if any). The UK also applies a dividend tax to dividends received from US stocks but you can receive £2,000 per year tax free anyway. You usually need to have a fairly substantial stock portfolio to start paying UK tax so for most people it will just be the withholding tax on dividends in the US that automatically gets deducted by your broker.
So say I buy a load of shares at $1 per share, and then that rises to $10 per share. At $10 I sell, and then I see the share price dip to $7 so I use the money I made selling at $10 to then buy more shares using the full profit made by selling at $10 to rebuy at $7. What would I pay tax on?
Well it would depend on how many shares you sell and when you buy back. If your total gain is less than £12,300 then it doesn’t matter you won’t pay any tax and there is no need to report anything. Let’s assume you exceed the allowance though.....If you repurchased the shares more than 30 days later then you would realize a $9 per share gain (10-1)...if you repurchased the shares within 30 days of the initial sale then the gain would be $3 per share (10-7) as they would make you use the repurchase price as your acquisition cost.
@@trader_uk1446 So rebuying the shares within 30 days means you'll pay LESS CGT? (tax on $9 per share vs tax on $3 per share) Something don't make sense...!
Yes but with most platforms the FX is determined already by the platform. I.e. if you sell US stocks the platform usually convert the proceeds back to your base currency at the time of sale and deposit it to your account. In this case you can just use the amount received in your base currency as the proceeds. If they don’t convert the money back to your base currency and leave it in your account as dollars then you can just use an exchange rate relevant to the sale date from XE or equivalent. Is that what you mean?
Thank you for the video, quick question with an example, lets say i invested 100k and was up +12,300. Would i be able to sell all the shares to get 123,000 out and not have to pay CG or would i only be allowed to take out 12,300. Surely you can take the 100k out too because that was your initial balance. Thanks.
exactly, in that case you could sell the full £112,300 which would return you the £100k initial investment and a £12,300 gain. It's only the gain that gets taxed (or not in that case because it would be covered by the personal allowance)
Awesome Content mate, please can I ask if you have made over 12,300 and sold all shares in the portfolio and if you leave the money in the brokerage account. Do you still have to declare this to hmrc please? Or do you only declare once the amount has been withdrawn to your own bank account? Many thanks
You would still need to declare it in this case as you have exceeded the capital gains allowance. The fact that the proceeds are still held in a trading account doesn’t make a difference 👍
is it 30 days after new tax year? my capital gains for the previous tax year seems to be reduced when I re-purchase some assets one day into the new tax year. no?
It’s 30 days following the date of disposal so you couldn’t sell Tesla on 4th April and buy them back on the 6th April(which is in a new tax year) otherwise they will make you use the cost price of the 6th as your cost price for the disposal
Its confusing stuff, but thanks for your explanation my question is what happens if you don't pay? Do they contact you? Also I need to just record everything I do buy and sell? Write down times and dates and price / gain. Where do we actually pay the capital gains?
Well you would report via a self assessment and pay the tax bill that arises. It’s a self assessment so if you didn’t declare then they would probably only find out if you got investigated. Having said that trading platforms do take your national insurance number on sign up so I’m not sure if there is a requirement for them to report large gains to hmrc.
Superb video, thanks a lot. If I have no other income and say, make £70,000 gains from stocks in one tax year, is my CGT 10% of (£70,000 - £12,300?) Also is it better to trade through 1. a limited company 2. SIPP pension 3. continue as private investor? Thanks for your sharing your opinion
well you would deduct the 12,300 leaving you a taxable gain of 57,700. As you have no other income the first 37,500 of this taxable gain would be at 10% and the remainder at 20%. This is because the gain itself takes you into the higher rate tax bracket. In terms of tax efficiency when investing it would usually be in the order with number 1 being the most efficient: 1. SIPP (the downside is that you won’t be able to access the money until retirement) 2. Private investor (crystallizing small gains each year to utilize your allowances and possibly the 10% bracket as well 3. Limited company (there are special rules when you use a company to invest rather than trade which result in HMRC charging a higher rate of corporation tax) I hope this helps a little.
@@trader_uk1446 I don't know how to thank you enough. You made it clear and gave some good advice. I did take a glance it but next time couldn't find it until now. This sentence "This is because the gain itself takes you into the higher rate tax bracket." is worth its weight in gold. All clear now and thank you so muck for your time.
@@trader_uk1446 Hi could I please add to the original poster's question and ask: On top of this taxation that you have talked about the 10 and 20% tax which will total £15,290 , will we also need to pay normal income tax on the £54,710? Or do we only pay capital gains tax on the 70 thousand he has stated?
@traderuk with regards to cryptocurrency am I right in thinking if I have x amount of cryptocurrency but it appreciates exponentially can I just sell 12,300 worth each tax year before having to pay cgt? Thankyou
Well yes cryptocurrency will usually be taxed under capital gains tax rules so you could sell enough to realize a 12300 gain in a tax year and not need to declare to hmrc under current rules.
@@trader_uk1446 Hello, I heard we still need to declare to HMRC if we make more than £1000 in capital gains EVEN if we do not owe any CGT (as we have an allowance of 12k) if the gain total is under 1K only then it does not need to be declared or something? Now im confused since you said you dont even need to declare if its under 12k
Forgive me for such a question but I am new and learning about investing. When you pay Capital Gains tax, is it only national insurance contributions you pay with it? Or do you get charged all 3 - capital gains, national insurance and income tax from the gain?
I already complete my annual self assessment for my property. Do I have to declare my stock profits regardless if they’re under my £12,300 tax allowance? Also say I don’t go over my £12,300 allowance do I still declare my losses? So for example if I make £12,000 in stocks from sales, but I also made a loss of £2000 from stocks I sold. Do I need to take my £2000 off my £12000 profit = £10,000 for that year or do I just declare my losses? Thanks
No, if your total gains are under the £12,300 allowance you don’t need to include them on the self assessment. in the example you give with 12k gains and a 2k loss in the year your total taxable gain is 10k. You do not need to declare this but you also can’t claim the losses as they must be offset against gains in the same year first. The same would apply if you had 20k gain and a 10k loss in the same year. Still no need to declare anything. The only time you would need to declare a total taxable gain under £12,300 is when your total gains before losses are more than 4 times the allowance. For example 60k in gains and 50k in losses is still a 10k taxable gain but this would need to be declared on a self assessment. I hope that makes sense.
Let's say I made 10K profit from stocks but I also have a day job that makes me 40K a year. Am I still allowed to keep that 10K profit tax free or do I now have a taxable income of 50K? Do I need to let my employer know about this? Loved the video- liked and subscribed. Thank you!
The capital gains allowance is separate to the personal allowance so even with £40k employment income you could still realise a gain of £10k tax free as it is within the capital gains allowance. There would be no need to inform your employer of any gains and you would usually only need to inform HMRC if you exceed the £12,300 capital gains allowance.
Yes in the vast majority of cases crypto investing falls under capital gains tax. There can be the odd situation where someone is trading crypto as a business in which case it would be taxed under income tax rules but it would be very very rare to find this.
Is the capital gains allowance separate from the money made in an ISA? And would selling collectibles count towards the allowance? (paintings, old video games, trading cards, etc.)
Yes it’s separate. Any gains you make from your ISA are exempt irrelevant of the amount and then you have your £12,300 CGT allowance on top. The paintings, old video games, trading cards etc would probably count as non wasting chattels (there are some articles by the ACCA which you can google) that usually means that providing the proceeds don’t exceed £6,000 they would also normally be exempt.
Hi I have been buying and selling shares in an investment account, most within 30 days or same day, and obviously some I have left. I'm happy now with my decisions and I didn't realise about the 30 day rule, which is bad. I spoke to an accountant and he said as long as total gain was under 12,300. My total gain is about 10k which was worked out on my platdorm, which is under the allowance, but watching this I'm now concerned. Do I now have to work out gains etc. Please help
don’t worry, if your gain is under £12,300 then there is no need to declare any gains so you’re fine. It’s only applicable to people that exceed the £12,300 capital gains allowance 👍
So if I buy say 50 shares in Tesla in the year 2021 but hold them until 2025 and then sell, am I exempt from capital gains tax because I didn’t buy and sell within the same year?
If i made profit on 5 profit trades £100 each which would be £500 but then lost in 1 trade the whole £500 would i still have to pay the tax on the 5 trades?
Don't forget you have a capital gains tax allowance of £12,300 per tax year so anything below this is not taxable anyway. In general though, yes you can offset capital losses against against gains in the same year so in that example your total gain would be £0 anyway
@@trader_uk1446 thanks so much very helpful im not the best at explaining things. Im aware of the tax allowance of £12.300 i should of put that in my example.. Im not the smartest pick of the bunch... Thanks again man im so new to taxes this helped alot
Tax is very complicated for me and i am so confused so i would like to ask you something since you are well informed person. For few months i am using Etoro platform to trade, they allow to copy other investors portfolios, so i did excacly this since i was learning and was scared to buy any stock by myself :) Ended up i was opening and closing many porfolios which i have now literally hundreds closed possition in my statements. Platform operate in US $ so as far i know i would have to convert all closed trades from $ to £ at a rate from day of that trade, its a mess to be honest. I work full time ~£20k a year, is a CGT calculated separetly from job income, do i still have yearly allowance from CGT or not? If not do i have to report what i gain during a year if i am under of £12.3k from tax free allowance to HMRC?
The capital gains allowance of £12,300 is in additional to your personal allowance so providing you are confident your gains don’t exceed £12,300 there is no need to pay tax or even report. In this case it wouldn’t make much sense to go back through each transaction to calculate the gain.
Hi mate, how does CGT work when you hold shares in different companies for a few years? I know you pay cgt on anything over 12.3k profit made in one tax year, but lets say i grow my account to 30k profit in a few years by holding shares in different companies and want to get my 30k profit out, how would i calculate it then? Also, if we make below 12.3k, do we have to declare anything at all? Thank you!
Hey, The tax is calculated when you realize the gain (by selling usually) so even though your gains were made over a number of years if you realized the full 30k in one tax year then you would pay tax on 17,700 (30,000 - 12,300). Thats why it’s better to realize the gain across 2 or more tax years where possible so you can take advantage of 2 years allowances. If your total gain in the tax year is under the 12,300 cgt allowance then there is no need to declare anything. I hope that helps 👍
@@trader_uk1446 thanks mate! One last question, lets say i make the 40k profit across three years and want to take it out then...i would do 40k (profit) - 36.9k (tax allowance added together for 3 years) = 3.1k....meaning id pay tax on the 3.1k i made? Just thinking as im thinking v long term with my shares and holdings so its a little confusing when someones has gone 3 years without declaring anything but at the end of 3/5 years they realise they’ve made about 40/50k profit
Question Sir: If I hold Tesla in a 'general investment account' and sell it on the last day of the tax year, can I buy it in my ISA the following day? Or do I have to wait 31 days?
When calculating CGT I use information from contract notes. I don't separate out cost of acquisition and disposal. That is, net disposal proceeds minus total acquisition cost. So I enter zero in the "Cost box". Is this acceptable to HMRC?
If you are not entering a cost price I feel that HMRC would be more likely to investigate the numbers. Even though the gain may be recorded as the right amount and the tax amount correct (if any) As far as I’m aware it’s a piece of software that flags suspicious returns and if a key piece of information is missing then it could be flagged. Providing the tax is right it wouldn’t cause a problem but it’s just hassle if it happens.
Hi Disposal proceeds should mean the net money returned after the sale transactions. Allowable costs ( including purchase price) is captured. I may have confused and should include the cost of selling into the Allowable costs. Please enlighten me again whether the Disposal proceeds should also exclude the stamp duty and fees when doing the computation 😞
Hi! If I gain £20,000 from shares, which is over the £12,300 threshold, can I send half the money to my wife and use her CGT allowance? Thanks in advance
You would usually need to transfer the asset into her name and give her full control of the asset first. To utilize her allowance it’s best if she owns the asset otherwise hmrc will attribute the full gain to you. alternatively you could realize a £12,300 gain before the 5th April and the. sell the rest after the 6th April in the new tax year.
Ok got a question for you, If I have a general invest account that I take £12,299.00 out of to transfer to an ISA account each year. Should that 12,299.00 being used toward my 20k ISA allowance be declared to the tax-man? This would be the only sale of shares from the general invest account each year.
If you sell £12,299 of shares then your gain is likely to be a lot less than this. HMRC are not interested in how much you sell. They are interested in how much you make (your gain) So if you sold £20k worth of shares that originally cost £10k then you would be within the allowance and wouldn't usually need to declare this but if you sold £20k of shares that originally cost £5k then you would have exceeded the allowance and would need to report this. So it's the gain and not the proceeds that you need to pay attention to. In the example you gave me, no you would not be required to report.
@@goldwing4264 AFAIK A gain is based on it's cash value when you acquired the asset versus the cash value when you disposed of it. Whether you bought or sold it using $ or £ or bitcoin or Nectar points. So you could have bought shares using 5000 Nectar points worth £50 at the time and sold them for 0.003 Bitcoins worth £60 at the time of sale. Your capital gain would be £10.
Yes there is no different treatment for day traders. I believe the majority of day trading platforms provide reports that will make these calculations for you though. I've never really looked at the reports though to see if they take account of the bed & breakfasting rules though.
@@trader_uk1446 Would it be possible to see an example of your excel sheet for calculating CGT on multiple trades. It would be greatly appreciated as your coverage of this topic is both coherent and concise.
Isn't all this relevant when you have CG over 12k? At the moment, my realised capital gains from stocks is 2.5k net expecting it to rise to 3.5k by end of FY, I do not need to pay any CGT on this, right?
Exactly, the first £12,300 is tax free and doesn’t even need reporting. After this you would apply the CGT rates. So you wouldn’t need to declare a 3.5k gain 👍
@@trader_uk1446 so even if I don't take out 12k within the tax free limit and let's say it accumulated to 20k do I still need to pay whatever gains I made above 12k which would be 8k even if I don't exchange or sell.
@@trader_uk1446 But say you make £2000 profit this year. Are you saying you should sell these shares, wait 30 days and then buy back in? Do you need to write this to HMRC so if you want to take out say £14000 profit made in the future its already wrote off?
If I make a loss on a stock can I offset that? I’m under 18 so can’t officially trade stocks so I have to send money to a friend who does it in his account for me (just in case that info is required)
well ignoring the fact that the stocks are in your friends name (because that could create an issue in the eyes of hmrc) yes you have to offset losses against gains in the same year. If they reduce your gain to zero then you can carry forward any remaining losses to offset against future gains.
@@knhfreeland4824 In effect, all you've done is given your friend a cash loan. All the gains and losses are in his name and will affect his tax return, not yours. Your accountant can't make any of his trading activity appear on your tax return, because they are not your gains or losses.
Thank you very much for making this video. I was in a real mess with my return and this has really helped
glad it helped. thanks for the comment too, it all helps with the channel 👌
With the current increase in the market I see Cryptocurrency as ultimately becoming a reserve currency for banks, playing much the same role as gold did in the early days of banking. Banks could issue digital cash with greater anonymity and lighter weight, more efficient transactions
If it hadn’t been with the help of my broker Mr. Rose Gardner whom I can’t thank enough, I would have completely given up on the crypto market after loosing so much money
Oh my, a bit surprised to know you work with her, I just received my ROI into my wallet through her platform and I am pretty impressed by her strategies
wow you invest with Mrs Rose too? I never knew she was much of an experienced trader, been on her telegrm for a while now but was skeptical, guess I’ll have to check her out again because I’m frustrated having to lose money, I need a trusted broker with experience
@Monica Lewiston you can reach her on telegram
Her user handle is investwithgardner
Wow you really made my head hurt. I'll be hiring an accountant to do it for me tomorrow now.
Thank you for your explanations !
Excellent Video! Thanks for making sense of the HMRC jargon.
Glad it was helpful!
Ayy great work on the monetisation mate! Also very informative as always!
Thanks mate, I’m always keeping up to date with your channel. Keep pushing, it’s a snowball effect for sure.
Great Video, easy to follow. I was never confident enough to do a General Account, as I had already maxed out my ISA and SIPP tax year, and had no idea about CGT. But this year I have put any spare cash in to an General Account Vanguard S&P 500, and plan to sell off 20k then put that into my Vanguard ISA 6th April. Looking at this video I can see unless the markets go mad, I will never pay CGT doing that each year, or at least for a lot of years to come.
I'm glad it helped. Yes that's a good approach to make the most of your allowances and even if the markets do go crazy you can always just sell off a bit less so that your gains don't exceed the CGT allowance in a tax year.
@@trader_uk1446 Yes I am probably going to do that, as on April 6th I will lump sum 20k into my ISA and then max what I am allowed into my Pension, then see what is left over of my CGT allowance and decide what to do
This is fabulous content - thank you for making it so clear and easy to understand and freely available! I have a question re: selling shares in a GIA and buying shares in an entirely different company on the same day. Is this still considered investing rather than day trading or is there any declarations I would need to make to HMRC specific to this? Thanks for your help
Say my salary from my job is £2,000 a month or £24,000 a year. This is automatically taxed, so i don't need to worry. If I invest and make a profit of £12,500 do I still have £12,300 allowance, but have to declare tax on the £200?
Yes you would still be entitled to the £12,300 capital gains allowance no matter how much you earn from you employment. In this case you would only pay tax on the £200 in excess of the allowance.
Had the same question thanks @Trader_uk
Thank you for this video! Really informative! Upto now I have never been involved in my tax obligation as I m an employee and everything is automatically paid! In the case that I invest and (hopefully) be subject to capital gains tax, how HMRC would get to know that the capital gains plus my income are above 50k? Should I declare it again even if this has been in their knowledge by other route!? Is there any risk to be double taxed on income if I declare it myself in order to provide all information to HMRC?
Does anyone know if the special rules apply if two different versions of "you" (i.e. separate entities) buy & sell the shares - in my case it means "me" selling shares from a investment fund, and my ISA fund with same company buying them back (usually on the same day, for the same price). With CGT allowance falling to £3k this year, you only need to have made ~15% gain to exceed that when shifting £20k into an ISA.
Also, re working out the total cost of buying the shares, if you have accumulation shares you can add the annual dividends (not paid to you as cash, but incorporated into the share value) to the "cost" of buying your Section 104 holdings and so reducing your CGT.
On my tax statement from broker trading 212 are 25903.12£ profit, loss 18816.46£, total gain 6903.72£ interest - 61.67£, fee 121.27£?
Do I need to declare capital gains?
Please explain to me
No you don't - they won't bother contacting you unless your total gain is above £12,300
This is exactly what I was searching for, thank you so much! I want to declare a loss made in 2018 in the current 2021 tax year (since it has 4 year timeframe allowed) but where would I fill it in, in the self assessment form please? In the current year calculation section as you have described in the video, with the disposal date as 2018? Thank you
What about selling and rebuying theoretically different ETFs which in practice track same shares (let's say both VWRP and HMWO have Apple in it)?
Hi, thanks for the video. I use trading 212 and on the history section it gives you a figure for your result, which is your gains minus losses, and you can export the history to an excel sheet. Can we use this result as our final profit/loss figure for HMRC? Or are there rules that apply that would make the simple figure of total profit/loss incorrect? Thank you
You need to take into account the 'same day' and '30-day' rules, unfortunately. It seems like madness to me. Oh, you might be in the US, in which case I don't know.
Hi there, I have a question specifically regarding Copy Trading on stocks are shares (such as on eToro), as I’m unsure at which point tax is payable. Consider the following scenario: - You initially invested £100k with a single copy trader (who for arguments sake trades stocks and holds them for 6 months on average) - Fortunately you make £50k profit in a year, of which £25k is realised profit and £25k is still in unclosed trades - All £150k is still invested with the copy trader and you have not withdrawn any funds or closed the copy Please could anyone confirm which of the following is correct in this scenario? 1. Capital gains tax is owed on the £25k in realised profit (minus annual CGT allowance), despite the fact it is still invested with the copy trader. 2. CGT is only due on the total profit once the copy has been closed and funds returned to you, so all funds may be left invested with them long-term before tax is due. 3. Both wrong/another option?! Any ideas? Thanks
hey bro, Why don't you share your spreadsheet here so that we can see how you keep record ? thank you
Ok, will try and do this 👍
Great work man - thank you for tackling this topic! This video has been very informative. I have a question though:
Let's say that in the current tax year you've made £10k gains from trading shares, but you've also incurred a £2k loss from some unprofitable investments, essentially making it a £8k profit for the year. Can I use the £2k loss to offset future Capital Gains over the course of the next 4 years or, since my total for this year was a gain, I've essentially defaulted my opportunity to use the £2k loss in the future?
I guess the better question is: Does your Total Capital Gains need to be negative for the entire tax year in order for you to be eligible to claim the loss in a subsequent year? Or, as long as you did not have to use this current year's loss (£2k in this example) to bring your CGT down, it's okay to carry that over? Thanks a lot!
Good question. Unfortunately any losses must be offset against gains in the same tax year first. If they reduce the gain to zero then you can carry forward any excess. So in your case you wouldn’t be able to carry them forward. If you do carry a loss forward though it then becomes more flexible, in future years you can use your loss to reduce a gain down to the 12,300 allowance.
Great Job as always bro. Thank you🙏
Thanks for the support 👍
Say you made losses in the previous year but didn't declare it on your tax return from share trading, how do you include it on your current return. Do you itemise the trades from the previous year and include the current tax year gains and losses in the document and how do you do it?
Having to do these horrendous calculations - and running the very real possibility of getting them wrong and having HMRC snapping at your ankles - well . . . . is it worth it?
Stick to ISAs.
Hi! Do you need to declare to HMRC if you sell shares that make profit less than the allowance set for that financial year??
Usually no, there are some rare circumstances where you’ve also made big losses which are reducing your gain below the limit but in most situations no.
Hi, I have question on Income tax for a self-employed sole trader/day trader, is there any difference on matching rule calculation with the CGT calculation? ie: B&B rules, 30days rule, last in first out etc. Thanks for ur help!
Thanks for the video.
Where do I have to claim for deduct certain costs of buying or selling shares from my gain?
Like fees, for example stockbrokers’ fees
Has anything changed, and is this the same for crypto?
Do we register for self assessment as self employed if trading is our only income?
Great video, but think am being thick.
I have a gain of £1,300 and bought and sold the same shares on the same day and also sold the same shares bought at various points within 30 days. None of these with 30 days either side of April 5th.
Because my gain is £11,000 under the limit for capital gains tax...do I have to worry about 'bed and breakfast' and same day disposal?
Have you found the Answer to this because I'm been looking at it for months and it's killing me
My employer gave us shares as a company incentive when it went public. What scenerio does that fall under as I didnt buy them directly. We also got taxed in November through
Stock Options Clearing - this is refers to the balance of the stock value less the tax applied at the rate of 45%. HMRC have already taxed me at 45% If i sell the shares do I still need to declare it? the shares are in the US
If I decide to sell some shares/crypto which sum to > £12,300 CGT allowance and give X amount of the Capital Gains proceeds to a UK registered charity, could I leverage this to reduce my Capital Gains tax bill and declare this within 23:12 of the video 'Deduction, if any, in respect of reliefs and elections'? If yes, would I need to show/attach the proof of proceeds going to the charity?
Really appreciate your content, great video! Quite new to this area.
thank you! very useful info
Im right now at the page trying the find the capital gains tax column but I dont see how you got there ... is it under paye section ? I dont know where to go from the gov page where im signed in
What if I’m trading in Dollars using an online app such as Stake. Do I report the gain when I transfer the dollars back to uk as pounds?
Do i need to declare tax if i make less than £12,300 capital gains tax allowance?
I have a question perhaps other viewers had already asked before. What if I just buy (invest very long term) stocks and never sell (keep for my family). Am I correct to assume that the value of my portfolio will not be marked-to-market and be subject to taxation? Even it has appreciated 5-10 folds. Is captital gain tax only payable on disposal? Many thanks.
Hi need to ask one thing. I am self employed and I already fill a self assessment form. In this case even my dividend capital gains are below the allowance values, I need to report them. Am I correct?
And one another thing I am confused is, I actually kept the profit in my broker account and did not transfer anything to my bank account. (Just purchased another stock with that little profit) Do I still need to report it even though it had never hit my actual bank account?
Thanks for your sharing this video. May I ask how about if we have several shares were sold for the year, should we fill up the capital gain one by one or just provide a spread sheet with full calculation of the total gain of the filing to HMRC?
You would usually just give details of the total gain/loss but attach any workings that show how that gain was calculated
Thank you for the video, it’s very informative. I’ve got a question about the bed and breakfasting if I may? If I sell all the shares of say Tesla I’ve acquired over sometime and use section 104 for the computation. I then buy them back within 30 days and sell them all off in say 10days time, I will just have use the cost of purchase 10 days ago to work out the gains right?
Example
(1) buy 100 tesla throughout 2017 (pool as section 104)
(2) sell 100 tesla on 01/04/2021
(3) buy 100 tesla on 10/04/2021
(4) sell 100 tesla on 15/04/2021
In this example there are 2 disposals. The first would be calculated as (2) - (3) because the shares were repurchased within 30 days and the second would be (4) - (1).
I hope that makes sense. In this example apart from shifting the gain into a different tax year the over all impact might not be significant but for most people they actually continue to hold the shares rather than selling again under step (4) and the b&b rules basically stop them from realising a gain.
Excellent video many thanks. Why would someone do the first option of the 2 you show as you might have to it again at some point in the year? Why not just wait and do it at the end of each financial year (option 2)?
Well if someone is in full time employment for example then they wouldn’t usually submit a tax return. The real time reporting allows them to declare the gain without committing themself to submitting a tax return each year when they otherwise wouldn’t. You’re right though, if you’re already registered for self assessment it’s obviously better to declare on there.
@@trader_uk1446 thanks for the reply, it's much appreciated. What do you do if you have enough stop working, would you suggest doing it at the end of each year? Cheers again 👍
Thank you, this was a great video! I have a question though: if you decided to be an investor full time (so, this is your only source of income), would you still work out your yearly tax this same way? Or would you have to fill another section of the self-assessment?
Thanks, I hope you can help
Well if you were operating it like a business technically it could become a trade and therefore be taxed under income tax rules. You would have to then fill out a self employed section of the self assessment instead.
I’ve read some guidance from HMRC on this and it usually takes quite a bit to convince them that it should be treated like a business which is in your favour as capital gains tax rules are far more beneficial for you.
@@trader_uk1446 I hope that's what happens when it comes to it haha. The thing I'm confused about though is what warrant it being operated like a business? As oppose to just buying and selling shares
Very informative. thank you
Thank you for the support
Can you do one of these videos on CGT in crypto investments. I have a good idea how this works, but not 100% using the same scenarios would be great if you get time fella. Good video, subbed and liked for you..
Yes will look into this. The rules should be the same though as HMRC treat crypto like a security. Thanks for the support
@@trader_uk1446 Thanks, do you agree crypto is treated exactly the same as shares when it comes to calculating, including the breakfast rule you mention.
Thanks for the step by step video. I have realised the video at 25:50 with "payment due by 31 January 2021". When is the cut off period for the new annual CGT allowance? I thought it will refresh on the 6 April (new tax year)? Please advise. Thanks again.
Yes, the liability would need to be paid by 31 January if reported on a self assessment but the allowance refreshes each year on the 6th April when the new tax year starts.
Quick question -
Say if I make 100k gains on my investment - can I take £12,000 each tax year to avoid taxes. As in sell shares which adds up to £12000
2nd question
Do I get taxed if I trade on my Isa account and it’s a us stock?
3rd question
Holding a stock for more than a year and selling all of it does it help paying less taxes or still the same?
Thanks
1.) Yes you can realize up to £12,300 of your gains each tax year to reduce your tax liability. You can sell as much as you like providing the gain doesn't exceed £12,300.
2.) No, US stocks held in an ISA are not subject to tax. Both the gains and the dividends are exempt
3.) It doesn't really matter how long you hold the stock. You will get taxed at the point of disposal. I think in the US they have different rates when you hold an asset for longer than a year but this doesn't apply to the UK.
NIO to the moon 🚀
nice video thanks. Do you have to pay Capital Gains Tax on CFDs like Etorro? thanks
Yes you would still be subject to capital gains tax if your total gain within the tax year exceeds the capital gains allowance (currently £12,300) 👍
@@trader_uk1446 I know how to work it it out but if its under £12.3k do you not have to do anything in terms of paperwork?
No you don't
with etoro you can close specific trades one at a time (if you bought 10 shares at £10 and then a week later 10 shares at £11 you could just close the £10 trade) In this case im assuming you can just work out your profit/loss per trade which it tells you and do it this way? Is that right or am I on the wrong track
Unfortunately no. I use etoro and have noticed this too but HMRC require that you pool the shares under what they call section 104. If you read this guidance it states that you shouldn’t recognize the disposal of any particular shares from the pool. Just use an average price.
www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg51555
How do you determine a 'weighted average' price for your section 4 holding? How far back do you have to go? Is it a matter of just averaging enough purchased shares to offset the disposal?
The section 104 will contain all shares that haven't been previously disposed of so you have to go all the way back to the first purchase to get the correct weighted average
@@trader_uk1446 thanks for the reply. Do you mean the first purchase that has not yet been sold off? If I sell all my shares at some point, and then reinvest as I go, I presumably won't need to go back before that date?
WHERE IT SAYS ' did you dispose of chargeable assets worth more than £48000' do they mean total amount including original principle or just profit before allowances?
They mean the total amount including principle
On more complex issue, been buying TSLA for a few years, sold some the day they joined the S&P500, just bought half that number back today. New ones cost more than the one I sold so how the he'll does that work man!!! Help please
In that case you still use the acquisition cost from the purchase you made within 30 days of the sale. This will result in a loss on the half that you purchased back. The other half you can pool together the earlier purchases and take an average cost. This will most likely result in a gain for the other half of the sale. Add the gain and the loss together to get the total taxable gain.
When Declaring your capital losses in the uk is there a cap of how much u can claim back (each tax year)
No, if you are offsetting capital losses against future gains then there is no limit. In the US i know they have a limit ($3,000 i think) but i believe this when you are offsetting capital losses against other income such as employment or self employment
Thanks for your videos! Quick question (with a possibly not so quick answer): what if your broker allows you to keep a separate account for each currency, so you don't have the GBP figures for each trade? Which FX rate should be used, assuming you have multiple trades in different times of the fiscal year?
Are you aware of any brokerage firm that simplify the tax return for you?
Thanks
you can use the spot rate on the day you made the purchase and disposal to determine the gain. If you google HMRC historic exchange rates you will find publications of exchange rates you can use. To be honest the brokerage can’t do much to simplify the return apart from provide you with reports because everyone’s tax situation is different.
@@trader_uk1446 Thanks a lot. I was looking further into it this morning and I think I found the rates you mentioned. I'll leave them here for future reference:
www.gov.uk/government/publications/hmrc-exchange-rates-for-2020-monthly
www.gov.uk/government/publications/exchange-rates-for-customs-and-vat-yearly
Correct me if I'm wrong, but as far as I understood, HMRC is pretty flexible with the rates: we could either use the yearly averages or the monthly ones, so long as we are consistent with it.
Many thanks!
what are the implications if I sell at a profit on the 4 April and buyback on the 6 April in an ISA
You would calculate any gain made on the 4th April sale using the original acquisition cost (hopefully this will be covered by your capital gains allowance so you won’t need to report or pay tax on anything under £12,300) Once you buy back under the protection of an ISA the asset is completely shielded from tax so doesn’t get considered for bed and breakfasting rules.
i hope this helps 👍
Hey bro great video, I watch some US-based investors in regards to the stock market however haven't seen many UK-based ones happy to be subscribed to the channel from early!
I have a question for you if you don't mind, honestly, these CGT rules in regards to the disposal (shares acquired on the same day/bed and breakfasting rules, etc) are really confusing me and freaking me out! What's the best way to go over the 2019/2020 trades is there some sort of calculator you can punch the numbers into that you use or anything or do you by any chance happen to do tax returns yourself for a fee for others or can you maybe point me in the right direction?
Are you making a lot of trades then? (this tends to be when it gets confusing) I don’t hold too many positions so mine is pretty easy to stay on top of. I will try and get a video done about how to keep track of the trading with a simple excel spreadsheet. If you can’t wait and you need assistance I would recommend Aidhan Accountancy. I used to work for them in London and they were always reasonably priced.
hi, thank you for the video, wha about trading Forex? is this like CFDs or capital gain?thanks
I actually looked at this previously as someone else asked the same question. I believe forex gains are usually taxed as capital gains but just note if the gains are made from spread betting and you are an amateur trader (I.e. hmrc don’t consider what your doing as a trade) then the gains can actually be tax free as it’s viewed in the same way as gambling.
Hi, I work for a company ( I pay taxes as PAYE), my question is: Can I still register for Self Assessment, to report my capital gains that I made in my Invest acccount, to HMRC ? Please Help !
Yes you can or you can use the real-time reporting service for capital gains which should prevent you from needing to register for self assessment.
remember if your gains are under £12,300 you don’t usually need to report them or pay any tax.
@@trader_uk1446 Thanks 🙏
@@trader_uk1446 So if my annual income is £20,000 say (so I already get taxed) but my investing income is less than £12,300, i DONT need to pay extra tax?
Great video. If you make on average 5k a year in your investments but cash out after 5 years and making a 25k within the 5 years. Will you have to declare this then? or will this be averaged from 5 years?
No the gain would all be recorded in the year you sold so it’s better to sell up a bit each year to realise the gain over a longer period and avoid tax. Just be careful of bed and breakfasting rules (basically don’t buy the stock back for at least 30 days)
Hi Trader_uk, Can I ask about the Computation sheet? Since I have done some day trading I have many transactions. So is there an HMRC approved Day trading computation excel sheet or should my broker format my trades for the tax year? I find this a bit daunting atm any links to any sample sheets would be greatly appreciated. Thanks CK
Did you have any joy with the day trading computation excel sheet, I'm in the same situation. Any help would be appreciated.
20:43 in so if I make less than £12,300 in gains ( from crypto ) I do not have to fill out a capital gains tax form or pay any tax?
This Is what I want to know!! So, if you have got any insight let me know
Hi, very informative. I also do have two questions and hope you can assist on this simple question. I am an employee of XYZ company and a basic tax rate payer with below £50,000. HR does all those paperwork and that I pay the relevant NI and Income Tax, etc.
I just opened a general investment account that is generally subject to CGT. I invest in shares that is worth less than £1000. Do I
1) Still need to fill in that form if I occurred a £1 gain from disposal or sales?
2) If I made a £1 loss from acquisition cost. I may wish to bring that forward but I do not need to report it as a made a loss than a chargeable gain on disposal?
Thanks!
No, at the moment you would only need to report to Hmrc when your gains exceed 12,300 in a tax year. If you want to carry the loss forward you can but I wouldn’t worry about reporting the loss yet, you have much longer to do this (I believe around 4 years to report losses). So I wouldn’t do anything just yet
@@trader_uk1446 Perfect, thank you. I guess I confused myself with Annual Exempt Amount as the same as Personal Allowance because both figures are identical.
@@WM-eg4gh Yes, it gets confusing but you have separate allowances (for now as there is talk of changing this)
Great content! I have a question:
If you buy Shares from a foreign country eg. The US. Are there any taxes due for the US and or any additional taxes other than Capital Gains Tax in the UK?
Many thanks.
The US apply a withholding tax to dividends paid by US companies to non US residents. If you’re from the UK this is usually 30% that gets withheld but if you sign form W8-Ben on your trading platform it gets reduced to 15%. There would be no capital gains tax payable in the US. As you are a UK resident you will pay capital gains here (if any). The UK also applies a dividend tax to dividends received from US stocks but you can receive £2,000 per year tax free anyway.
You usually need to have a fairly substantial stock portfolio to start paying UK tax so for most people it will just be the withholding tax on dividends in the US that automatically gets deducted by your broker.
@@trader_uk1446 that's brilliant thanks for a fast and concise reply. I've subscribed to your channel and look forward to your future content.
So say I buy a load of shares at $1 per share, and then that rises to $10 per share. At $10 I sell, and then I see the share price dip to $7 so I use the money I made selling at $10 to then buy more shares using the full profit made by selling at $10 to rebuy at $7. What would I pay tax on?
Well it would depend on how many shares you sell and when you buy back. If your total gain is less than £12,300 then it doesn’t matter you won’t pay any tax and there is no need to report anything. Let’s assume you exceed the allowance though.....If you repurchased the shares more than 30 days later then you would realize a $9 per share gain (10-1)...if you repurchased the shares within 30 days of the initial sale then the gain would be $3 per share (10-7) as they would make you use the repurchase price as your acquisition cost.
@@trader_uk1446 So rebuying the shares within 30 days means you'll pay LESS CGT? (tax on $9 per share vs tax on $3 per share) Something don't make sense...!
What about fix impact with online share trading, does that factor in when calculating gains/losses
Yes but with most platforms the FX is determined already by the platform. I.e. if you sell US stocks the platform usually convert the proceeds back to your base currency at the time of sale and deposit it to your account. In this case you can just use the amount received in your base currency as the proceeds.
If they don’t convert the money back to your base currency and leave it in your account as dollars then you can just use an exchange rate relevant to the sale date from XE or equivalent.
Is that what you mean?
@@trader_uk1446 yes, thanks a lot for your reply
Thank you for the video, quick question with an example, lets say i invested 100k and was up +12,300. Would i be able to sell all the shares to get 123,000 out and not have to pay CG or would i only be allowed to take out 12,300. Surely you can take the 100k out too because that was your initial balance. Thanks.
exactly, in that case you could sell the full £112,300 which would return you the £100k initial investment and a £12,300 gain. It's only the gain that gets taxed (or not in that case because it would be covered by the personal allowance)
@@trader_uk1446 cheers dude.
Awesome Content mate, please can I ask if you have made over 12,300 and sold all shares in the portfolio and if you leave the money in the brokerage account. Do you still have to declare this to hmrc please? Or do you only declare once the amount has been withdrawn to your own bank account? Many thanks
You would still need to declare it in this case as you have exceeded the capital gains allowance. The fact that the proceeds are still held in a trading account doesn’t make a difference 👍
is it 30 days after new tax year? my capital gains for the previous tax year seems to be reduced when I re-purchase some assets one day into the new tax year. no?
It’s 30 days following the date of disposal so you couldn’t sell Tesla on 4th April and buy them back on the 6th April(which is in a new tax year) otherwise they will make you use the cost price of the 6th as your cost price for the disposal
Its confusing stuff, but thanks for your explanation my question is what happens if you don't pay? Do they contact you?
Also I need to just record everything I do buy and sell? Write down times and dates and price / gain. Where do we actually pay the capital gains?
Well you would report via a self assessment and pay the tax bill that arises. It’s a self assessment so if you didn’t declare then they would probably only find out if you got investigated. Having said that trading platforms do take your national insurance number on sign up so I’m not sure if there is a requirement for them to report large gains to hmrc.
Trader_uk g
Superb video, thanks a lot. If I have no other income and say, make £70,000 gains from stocks in one tax year, is my CGT 10% of (£70,000 - £12,300?)
Also is it better to trade through 1. a limited company 2. SIPP pension 3. continue as private investor? Thanks for your sharing your opinion
well you would deduct the 12,300 leaving you a taxable gain of 57,700. As you have no other income the first 37,500 of this taxable gain would be at 10% and the remainder at 20%. This is because the gain itself takes you into the higher rate tax bracket.
In terms of tax efficiency when investing it would usually be in the order with number 1 being the most efficient:
1. SIPP (the downside is that you won’t be able to access the money until retirement)
2. Private investor (crystallizing small gains each year to utilize your allowances and possibly the 10% bracket as well
3. Limited company (there are special rules when you use a company to invest rather than trade which result in HMRC charging a higher rate of corporation tax)
I hope this helps a little.
@@trader_uk1446 I don't know how to thank you enough. You made it clear and gave some good advice. I did take a glance it but next time couldn't find it until now. This sentence "This is because the gain itself takes you into the higher rate tax bracket." is worth its weight in gold. All clear now and thank you so muck for your time.
@@trader_uk1446 Hi could I please add to the original poster's question and ask: On top of this taxation that you have talked about the 10 and 20% tax which will total £15,290 , will we also need to pay normal income tax on the £54,710? Or do we only pay capital gains tax on the 70 thousand he has stated?
@traderuk with regards to cryptocurrency am I right in thinking if I have x amount of cryptocurrency but it appreciates exponentially can I just sell 12,300 worth each tax year before having to pay cgt? Thankyou
Well yes cryptocurrency will usually be taxed under capital gains tax rules so you could sell enough to realize a 12300 gain in a tax year and not need to declare to hmrc under current rules.
@@trader_uk1446 Hello, I heard we still need to declare to HMRC if we make more than £1000 in capital gains EVEN if we do not owe any CGT (as we have an allowance of 12k) if the gain total is under 1K only then it does not need to be declared or something?
Now im confused since you said you dont even need to declare if its under 12k
@@CODE14464 mate I been stressing about this for months
@@CODE14464 what's your update ??
@@naheems786 Im not a accountant
Forgive me for such a question but I am new and learning about investing. When you pay Capital Gains tax, is it only national insurance contributions you pay with it? Or do you get charged all 3 - capital gains, national insurance and income tax from the gain?
You would only pay capital gains tax on the gains, nothing else.
@@trader_uk1446 need more information.... So if I'm under 12k of spending and selling is that fine ?
I already complete my annual self assessment for my property. Do I have to declare my stock profits regardless if they’re under my £12,300 tax allowance?
Also say I don’t go over my £12,300 allowance do I still declare my losses? So for example if I make £12,000 in stocks from sales, but I also made a loss of £2000 from stocks I sold. Do I need to take my £2000 off my £12000 profit = £10,000 for that year or do I just declare my losses? Thanks
No, if your total gains are under the £12,300 allowance you don’t need to include them on the self assessment.
in the example you give with 12k gains and a 2k loss in the year your total taxable gain is 10k. You do not need to declare this but you also can’t claim the losses as they must be offset against gains in the same year first. The same would apply if you had 20k gain and a 10k loss in the same year. Still no need to declare anything. The only time you would need to declare a total taxable gain under £12,300 is when your total gains before losses are more than 4 times the allowance. For example 60k in gains and 50k in losses is still a 10k taxable gain but this would need to be declared on a self assessment.
I hope that makes sense.
@@trader_uk1446 top man, many thanks for explaining. Really help 👍🏼
Let's say I made 10K profit from stocks but I also have a day job that makes me 40K a year. Am I still allowed to keep that 10K profit tax free or do I now have a taxable income of 50K? Do I need to let my employer know about this? Loved the video- liked and subscribed. Thank you!
The capital gains allowance is separate to the personal allowance so even with £40k employment income you could still realise a gain of £10k tax free as it is within the capital gains allowance. There would be no need to inform your employer of any gains and you would usually only need to inform HMRC if you exceed the £12,300 capital gains allowance.
@@trader_uk1446 Thank you very much for your response. Very clear and helpful.
Hi Adam,
Quick question, this episode apply for Crypto as well?
Yes in the vast majority of cases crypto investing falls under capital gains tax. There can be the odd situation where someone is trading crypto as a business in which case it would be taxed under income tax rules but it would be very very rare to find this.
Is the capital gains allowance separate from the money made in an ISA?
And would selling collectibles count towards the allowance? (paintings, old video games, trading cards, etc.)
Yes it’s separate. Any gains you make from your ISA are exempt irrelevant of the amount and then you have your £12,300 CGT allowance on top. The paintings, old video games, trading cards etc would probably count as non wasting chattels (there are some articles by the ACCA which you can google) that usually means that providing the proceeds don’t exceed £6,000 they would also normally be exempt.
hi. if I lose £5000 in ISA account, and gain £14000 in dealing account 20/21year. Do I need to pay capital gain tax? thanks
Hi I have been buying and selling shares in an investment account, most within 30 days or same day, and obviously some I have left. I'm happy now with my decisions and I didn't realise about the 30 day rule, which is bad. I spoke to an accountant and he said as long as total gain was under 12,300. My total gain is about 10k which was worked out on my platdorm, which is under the allowance, but watching this I'm now concerned. Do I now have to work out gains etc. Please help
Some of these were same company as I had sold and changed my mind, and bought back. Would an accountant work this all out for me?
don’t worry, if your gain is under £12,300 then there is no need to declare any gains so you’re fine. It’s only applicable to people that exceed the £12,300 capital gains allowance 👍
@@trader_uk1446 thanks for your time 👍👍👍
So if I buy say 50 shares in Tesla in the year 2021 but hold them until 2025 and then sell, am I exempt from capital gains tax because I didn’t buy and sell within the same year?
No, your gain is realized in the year you sell them. You would pay tax using the applicable rates in 2025
@@trader_uk1446 I thought so. It was just wishful thinking 😁
If i made profit on 5 profit trades £100 each which would be £500 but then lost in 1 trade the whole £500 would i still have to pay the tax on the 5 trades?
Don't forget you have a capital gains tax allowance of £12,300 per tax year so anything below this is not taxable anyway. In general though, yes you can offset capital losses against against gains in the same year so in that example your total gain would be £0 anyway
@@trader_uk1446 thanks so much very helpful im not the best at explaining things. Im aware of the tax allowance of £12.300 i should of put that in my example.. Im not the smartest pick of the bunch... Thanks again man im so new to taxes this helped alot
Tax is very complicated for me and i am so confused so i would like to ask you something since you are well informed person. For few months i am using Etoro platform to trade, they allow to copy other investors portfolios, so i did excacly this since i was learning and was scared to buy any stock by myself :) Ended up i was opening and closing many porfolios which i have now literally hundreds closed possition in my statements. Platform operate in US $ so as far i know i would have to convert all closed trades from $ to £ at a rate from day of that trade, its a mess to be honest. I work full time ~£20k a year, is a CGT calculated separetly from job income, do i still have yearly allowance from CGT or not? If not do i have to report what i gain during a year if i am under of £12.3k from tax free allowance to HMRC?
The capital gains allowance of £12,300 is in additional to your personal allowance so providing you are confident your gains don’t exceed £12,300 there is no need to pay tax or even report. In this case it wouldn’t make much sense to go back through each transaction to calculate the gain.
@@trader_uk1446 Thank you very much. It saves me a lot of trouble. I want to make it more organised in the next tax year :)
Hi mate, how does CGT work when you hold shares in different companies for a few years?
I know you pay cgt on anything over 12.3k profit made in one tax year, but lets say i grow my account to 30k profit in a few years by holding shares in different companies and want to get my 30k profit out, how would i calculate it then?
Also, if we make below 12.3k, do we have to declare anything at all?
Thank you!
Hey, The tax is calculated when you realize the gain (by selling usually) so even though your gains were made over a number of years if you realized the full 30k in one tax year then you would pay tax on 17,700 (30,000 - 12,300). Thats why it’s better to realize the gain across 2 or more tax years where possible so you can take advantage of 2 years allowances.
If your total gain in the tax year is under the 12,300 cgt allowance then there is no need to declare anything.
I hope that helps 👍
@@trader_uk1446 thanks mate!
One last question, lets say i make the 40k profit across three years and want to take it out then...i would do 40k (profit) - 36.9k (tax allowance added together for 3 years) = 3.1k....meaning id pay tax on the 3.1k i made?
Just thinking as im thinking v long term with my shares and holdings so its a little confusing when someones has gone 3 years without declaring anything but at the end of 3/5 years they realise they’ve made about 40/50k profit
Question Sir: If I hold Tesla in a 'general investment account' and sell it on the last day of the tax year, can I buy it in my ISA the following day? Or do I have to wait 31 days?
No, the fact you are buying it back within the protection of an ISA means the bed and breakfasting rules wouldn't apply.
@@trader_uk1446 many Thanks!
When calculating CGT I use information from contract notes. I don't separate out cost of acquisition and disposal. That is, net disposal proceeds minus total acquisition cost. So I enter zero in the "Cost box". Is this acceptable to HMRC?
If you are not entering a cost price I feel that HMRC would be more likely to investigate the numbers. Even though the gain may be recorded as the right amount and the tax amount correct (if any) As far as I’m aware it’s a piece of software that flags suspicious returns and if a key piece of information is missing then it could be flagged. Providing the tax is right it wouldn’t cause a problem but it’s just hassle if it happens.
@@trader_uk1446 Many thanks for your reply. I will heed your advice.
Hi Disposal proceeds should mean the net money returned after the sale transactions. Allowable costs ( including purchase price) is captured. I may have confused and should include the cost of selling into the Allowable costs. Please enlighten me again whether the Disposal proceeds should also exclude the stamp duty and fees when doing the computation 😞
Hi! If I gain £20,000 from shares, which is over the £12,300 threshold, can I send half the money to my wife and use her CGT allowance? Thanks in advance
You would usually need to transfer the asset into her name and give her full control of the asset first. To utilize her allowance it’s best if she owns the asset otherwise hmrc will attribute the full gain to you. alternatively you could realize a £12,300 gain before the 5th April and the. sell the rest after the 6th April in the new tax year.
Ok got a question for you, If I have a general invest account that I take £12,299.00 out of to transfer to an ISA account each year. Should that 12,299.00 being used toward my 20k ISA allowance be declared to the tax-man? This would be the only sale of shares from the general invest account each year.
If you sell £12,299 of shares then your gain is likely to be a lot less than this. HMRC are not interested in how much you sell. They are interested in how much you make (your gain) So if you sold £20k worth of shares that originally cost £10k then you would be within the allowance and wouldn't usually need to declare this but if you sold £20k of shares that originally cost £5k then you would have exceeded the allowance and would need to report this. So it's the gain and not the proceeds that you need to pay attention to. In the example you gave me, no you would not be required to report.
@@trader_uk1446 so is it a gain at the time of sale or when you bank it?
@@goldwing4264 AFAIK A gain is based on it's cash value when you acquired the asset versus the cash value when you disposed of it. Whether you bought or sold it using $ or £ or bitcoin or Nectar points. So you could have bought shares using 5000 Nectar points worth £50 at the time and sold them for 0.003 Bitcoins worth £60 at the time of sale. Your capital gain would be £10.
what about daytraders? Are they expected to make these calculations for all of their thousands of trades every year?
Yes there is no different treatment for day traders. I believe the majority of day trading platforms provide reports that will make these calculations for you though. I've never really looked at the reports though to see if they take account of the bed & breakfasting rules though.
@@trader_uk1446 Oh ok, thank you for replying.
@@trader_uk1446 Would it be possible to see an example of your excel sheet for calculating CGT on multiple trades. It would be greatly appreciated as your coverage of this topic is both coherent and concise.
Isn't all this relevant when you have CG over 12k? At the moment, my realised capital gains from stocks is 2.5k net expecting it to rise to 3.5k by end of FY, I do not need to pay any CGT on this, right?
Exactly, the first £12,300 is tax free and doesn’t even need reporting. After this you would apply the CGT rates. So you wouldn’t need to declare a 3.5k gain 👍
@fire trails This is what I was looking for... Will this stand for the 2021/2022 tax year as well??
So I can make as much as I can sell , exchange to fiat spend as long as I'm under 12k. Capital gains
Providing your gain doesn't exceed £12,300 there is no tax to pay or need to declare
@@trader_uk1446 so even if I don't take out 12k within the tax free limit and let's say it accumulated to 20k do I still need to pay whatever gains I made above 12k which would be 8k even if I don't exchange or sell.
@@naheems786 You will only potentially pay tax when you sell or dispose. Not before.
say for example i had 20k invested but no gains and i withdraw would i have to file anything ??
No, you wouldn't be required to report anything in that case
@@trader_uk1446 thanks for the reply man ! Great content keep it up 🙂
If I earn £25,000 per annum (my full time job) that's already been taxed. What is my CGT allowance if I have any?
This is before tax but it gets taxed through work anyway is what I mean
@@gareth7762 12.3k tax free allowance as normal
@@KRedsTV thanks
What if stock trading is your only income?
Do you need to declare anything if you've made under the limit?
No, if you haven’t exceeded your capital gains allowance then there is usually no need to report 👍
@@trader_uk1446 But say you make £2000 profit this year. Are you saying you should sell these shares, wait 30 days and then buy back in? Do you need to write this to HMRC so if you want to take out say £14000 profit made in the future its already wrote off?
I guess in simple terms what im asking is how do you carry this £2k profit over to another year?
If I make a loss on a stock can I offset that? I’m under 18 so can’t officially trade stocks so I have to send money to a friend who does it in his account for me (just in case that info is required)
well ignoring the fact that the stocks are in your friends name (because that could create an issue in the eyes of hmrc) yes you have to offset losses against gains in the same year. If they reduce your gain to zero then you can carry forward any remaining losses to offset against future gains.
@@trader_uk1446 should I tell my accountant who does my tax return that they’re in my friends name or no?
@@knhfreeland4824 In effect, all you've done is given your friend a cash loan. All the gains and losses are in his name and will affect his tax return, not yours. Your accountant can't make any of his trading activity appear on your tax return, because they are not your gains or losses.
if I make profit only £4000 a year then do I have to report to HMRC?
No you don’t need to tell HMRC if your gains are under £12,300
@@trader_uk1446 thanks bro
That's why so many rich UK ppl move away from this country....
Yes, I recommend The Service of Mr Daniel Allen he's a great expert and has been a influential in my financial journey