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Where Taxpayers and Advisers Meet

Day trading in the UK

DrJonoG
Posts:2
Joined:Fri Nov 12, 2021 3:14 pm
Day trading in the UK

Postby DrJonoG » Fri Nov 12, 2021 3:21 pm

Hello,

This is my first post here, so apologies if it is in the wrong forum.

I am based in the UK looking to trade american stocks (NASDAQ and NYSE). Typically I'll be making 3-5 trades per day and not holding the stocks for longer than a couple of hours. I expect each trade will total around £20,000-£40,000 worth of shares. I'll be using a margin account too.

I contacted HMRC regarding tax and capital gains and they sent the following back:
A charge to Stamp Duty Reserve Tax (SDRT) under FA86/S87 arises where a Person (A) agrees with another Person (B) to transfer chargeable securities (whether or not to Person (B) for consideration in money or money’s worth. The charge applies:

• whether or not there is an instrument or other document is executed completing the transfer.
• whether or not settlement of the transfer takes place.
• whether or not the agreement to transfer is made or effected in the UK or overseas; and
• regardless of whether the parties to the agreement to transfer re resident in the UK or elsewhere.

The principal charge to SDRT is at the rate of 0.5% of the amount or value of the consideration paid in money or money’s worth.

I can confirm that SDRT is applicable each time that you purchase UK chargeable shares, whether you sell them an hour later or not.

This technically means that each day I'll owe up to £1,000 in capital gains.. Surely this cannot be right? Given that I expect to only make around £400 profit per day. Does anyone else day trade in the UK that can offer some guidance on this? HMRC seemed very unsure of the answer.

Any help would be much appreciated. I'm a deaf academic looking for to try another source of income that doesn't involve awkward meetings :D

Thank you

Jonathon

darthblingbling
Posts:455
Joined:Wed Aug 02, 2017 9:09 pm

Re: Day trading in the UK

Postby darthblingbling » Sat Nov 13, 2021 12:57 pm

Where did you get the figure £1000 from?

darthblingbling
Posts:455
Joined:Wed Aug 02, 2017 9:09 pm

Re: Day trading in the UK

Postby darthblingbling » Sat Nov 13, 2021 1:03 pm

Also if you're doing this as a trade there's a strong case that profits would be subject to income tax and not capital gains as self employment income (Class 4 NIC too).

If you want some tax efficiency you'd be better getting professional advice.

DrJonoG
Posts:2
Joined:Fri Nov 12, 2021 3:14 pm

Re: Day trading in the UK

Postby DrJonoG » Sat Nov 13, 2021 1:12 pm

The £1,000 is calculated assuming that 5 trades are made buying £40,000 worth of shares (5 * 40,000) * 0.5% = 1,000

Yes, looking to get some professional advice, just wondering if anyone here has experience.

Paying tax on profits/income is perfectly fine. I was just surprised I had to pay each time I bought them too. I know it's a rule for UK based stocks, but wasn't sure if the US meant I didn't.

darthblingbling
Posts:455
Joined:Wed Aug 02, 2017 9:09 pm

Re: Day trading in the UK

Postby darthblingbling » Sat Nov 13, 2021 1:19 pm

Ah I get you. Sorry I thought that daily purchase was up to £40k max, not 5 lots of it.

£400 profit seems a big risk for a £200k purchase, is that generally the average for a day trader?

darthblingbling
Posts:455
Joined:Wed Aug 02, 2017 9:09 pm

Re: Day trading in the UK

Postby darthblingbling » Sat Nov 13, 2021 1:23 pm

I'll admit stamp duty isn't my strength, but I do think it's only shares in UK companies and only foreign companies if they're on a UK register. Non UK shares listed on the NYSE and NASDAQ may be exempt, but I'd wait for someone with more stamp duty knowledge than I to confirm.

JOHNRE
Posts:86
Joined:Sat Feb 06, 2016 2:03 pm

Re: Day trading in the UK

Postby JOHNRE » Tue Nov 23, 2021 2:58 pm

You don’t pay Stamp Duty on US shares…see below.
https://www.gov.uk/tax-buy-shares


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