CFD's and Capital Gains Tax versus Corporation Tax

[tax2015]

Hi,

I appreciate there are other CFD topics but having read them they have not answered my two queries. I have started trading CFDs (Contracts for Difference) and suddenly thought of a tax dilemma. If you transfer £15k of your non-business savings into a CFD account and lost the £15k instantly; if you then went on to make £20k in the same tax year (i.e. within 6 months), would you only pay capital gains tax on the profit after the £15k has been clawed back?

Also, regarding CFDs - if you have a Ltd company do you still have to declare Capital Gains Tax when you are already paying Corporation Tax?

Hope these questions made sense? Thank you for reading.

[Wesram]

Hi

If any profits and losses made on CFD's withing the same tax year (6 April to 5 April - assuming you are trading these individually) are offset and you would pay capital gains tax on the net gain in the year (after offsetting your annual exempt amount).

Also if you made a loss in one tax year then this can be carried forward into future tax years to be set off against any subsequent profits.

If you are trading through a company, then the company would pay corporation tax on the profits (calculated under the capital gains tax rules) but it would not also pay capital gains tax on top of the corporation tax paid.

Hope this helps

Mark
Wesram Limited

[tax2015]

Dear Mark, I am so sorry for the delay in my response. I thought I was subscribed to the post and I would be emailed automatically when someone replied. Very helpful comment thank you.

Re the Capital Gains tax included in the Corporation Tax please can I ask a few more questions.

On the CT600 PDF tax form which HMRC provide, can you confirm that the capital gains tax (and any losses) calculation is done during submitting this (and its accounting and other components supplied within this) form? If yes, then my next question is therefore - does a Ltd company only declare all this once each financial year?

Up until now I have not taken a salary, but I have taken monthly dividend payments (as per the legal documented requirements). This means that the only tax I have focused on each year has been the corporation tax and so the CT600 appears to have provided all of the declarations needed for a Ltd company. Is this correct; is this a once a year only declaration to HMRC? Or are there monthly tax payments that should be made against dividends etc?

To be clear, I do not have any staff so no employee related tax. This business is a one man Ltd company that receives revenue from trading CFDs and the occasional IT contract but no income tax is paid on dividend payments. The only tax focused on is corporation tax once a year (and national insurance stamps of course).

Thank you in advance.