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Where Taxpayers and Advisers Meet

trade CFD -CGT

csimpifon86
Posts:2
Joined:Mon Jan 09, 2017 6:52 pm
trade CFD -CGT

Postby csimpifon86 » Mon Jan 09, 2017 9:53 pm

Hi ,

I have seen many different case on the forum but i couldn't find any that fits to my profile .
Im planning to start live trading with a CFD broker. i live and work in the uk also employee of a company and earn approx. 15-16 k / annum. if i make lets say 500-1000 ponds profit or loss how do i pay tax after that? after loss i dont pay tax but i can offset it next year assumedly.
I trade only options but does it really matter what is the underlying since it is CFD i owe the gain or loss i made on the contracts . is it right?
im planning to execute trades 3-4 times a week and not holding them longer than a day or two.
i would trade as a hobby not for business.

I found this example on gov.uk and from that point I am confused

"Example

Your taxable income (your income minus your Personal Allowance and any Income Tax reliefs) is £20,000 and your taxable gains are £12,100.
First, deduct the tax-free allowance of £11,100 from your taxable gain. This leaves £1,000 to pay tax on.
Add this to your taxable income. Because the combined amount of £21,000 is less than £31,785 (the basic rate band for the 2015 to 2016 tax year), you pay Capital Gains Tax at 18%.

This means you’ll pay £180 in Capital Gains Tax."



"The standard Personal Allowance is £11,000, which is the amount of income you don’t have to pay tax on."
"You only have to pay Capital Gains Tax on your overall gains above your tax-free allowance (called the Annual Exempt Amount). The tax-free allowance is £11,100"

( both from gov.uk )

So are there taxable income and taxable gains with different allowances ? in that case i dont pay tax on that small amount of gain ... but that would be too easy and sounds too good :D

Any advice, comment would be appreciated .


Thank u

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: trade CFD -CGT

Postby bd6759 » Tue Jan 10, 2017 12:57 am

The perosnal allowance is the amount of income you don't pay tax on.

The annual exemption is the amount of gains you don't pay tax on,

You get them both, but they are not transferable. You cannot set the personal allowance against gains, or vice versa.

csimpifon86
Posts:2
Joined:Mon Jan 09, 2017 6:52 pm

Re: trade CFD -CGT

Postby csimpifon86 » Tue Jan 10, 2017 1:08 am

Thank you for the comment

In that case i don't have to pay CGT tax till profit not reach £11,100 8-)


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