When share dealing becomes trading
Posted: Mon Oct 18, 2010 3:31 pm
I wish to trade shares - buying one or two holdings at the beginning of each month, holding them for that month only and re-investing the proceeds in another share or shares and so on each month. I would start with a capital base of approx £80,000. Irrespective of any gains the size of the capital deployed would require me to file a Capital Gains Tax Return, I assume. The question that occurs is whether the Revenue would view these transactions as trading. This issue must have been raised before but I could not find anything on your website covering it. I should say that being early-retired I have no income source other than the interest currently earned on the sum mentioned above. If - when I declared these dealings in my tax return - the Revenue did decide I was trading what would be the ramifications ? Would I for instance be penalised for not having first told them I was trading ? Presumably the tax on any income earned would be broadly similar to Capital Gains tax under the new CGT regime but at what stage would I begin to have to pay compulsory NI ? There is a further issue : I have for the past several years been spending more than six months out of the UK. Until now I have not given any thought to the tax implications of this and I continue to consider myself UK domiciled for all purposes. Before embarking on my share dealing enterprise, would it be tax advantageous to declare myself non-resident and what would the consequences be - in terms of tax, pension credit, NHS treatment - should I return to the UK on a permanent basis ? I look forward to hearing from you.