Hello,
I have become quite interested in the rise of so-called "social trading" or "copy-trading" networks, such a Etoro and Zulutrade, where you are offered the chance to mirror the trades of other traders. The ideas is that you invest some money to automatically follow their strategies by the system executing trades exactly as they do in proportion to the monies invested. The house makes money by the commission on your trades. What no-one seems to articulate is how any gains or losses on these trades get treated for tax. If they were all done within an OEIC wrapper, then it would be relatively simply matter of working out the CGT when you sell it, and any dividend income in the meantime. But, for a frequently traded portfolio, I fear it could be radically different. Is it capital gains or income? I believe frequent traders have their gains treated as income, as opposed to investors who attract CGT - so, if you copy a frequent trader for an extended period, does that make you one too? I have a horrible fear that I may end up having to document hundreds on trades on my tax return.
From a cursory internet search, I can't seem to find any guidance on this (and the companies themselves don't have anything on their websites) so would be grateful for any advice or suggestions as to where to look.
Many thanks.
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