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Regular share trading

Can a regular share trading considered as a business activity and any losses made can be off set

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I have been actively buying and selling shares for last few years and any profit or loss is declare under capital gain. This trading is funded by my employment income. can I amend my SA return to show the activity as a business activity and claim my losses against employment income?

 

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By Wanderer
06th Nov 2020 07:10

JGM wrote:
Regular share trading
Can a regular share trading considered as a business activity and any losses made can be off set

I have been actively buying and selling shares for last few years and any profit or loss is declare under capital gain. This trading is funded by my employment income. can I amend my SA return to show the activity as a business activity and claim my losses against employment income?

 

No.
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Replying to Wanderer:
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By Paul Crowley
06th Nov 2020 07:16

No +1
Ridiculous idea

If successful tax is zero up to the allowance
If unsuccessful stop investing

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By mjshort
06th Nov 2020 07:48

I think that this person is not an accountant and is posing questions on his own behalf.

However, if your level of dealing increases it could be viewed as self-employment by HMRC. But be prepared for them to not be inclined to accept your prefered date for the change in the tax situation and the consequential penalties etc.

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Replying to mjshort:
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By Tax Dragon
06th Nov 2020 09:06

Have you ever seen this in practice? I'm struggling even to think of the theory.

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Replying to Tax Dragon:
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By Mr_awol
06th Nov 2020 13:40

Wasnt there a thread on it only a few weeks ago? I'm sure i contributed.

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Replying to Mr_awol:
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By Tax Dragon
06th Nov 2020 14:44

Crypto comes up a lot. I don't remember a shares thread. But I don't see them all.

Similar principles I should think, though.

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Replying to Mr_awol:
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By Paul Crowley
06th Nov 2020 18:53

IIRC the thread was about calculating and rounding on multiple transactions same day

https://www.accountingweb.co.uk/any-answers/rounding-to-pounds-in-cgt-calcs

Found it

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By MJShone
06th Nov 2020 10:02

There are cases where buying and selling shares has been found to be a trade eg Ali, Gill. However, for obvious reasons, HMRC are extremely reluctant to agree that it's a trade where there are losses.

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Replying to MJShone:
paddle steamer
By DJKL
06th Nov 2020 11:26

Given most amateur day traders/short term traders etc are pretty useless at their art I can appreciate HMRC's reluctance .It is hard enough making money in the market with my long term buy and hold approach, at least with it all I need to do is choose the right companies at the right price and wait, the short termer, like the comedian, needs to develop good timing, a far more difficult skill to develop.

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By Tax Dragon
06th Nov 2020 12:09

Thank you. I'd wondered what the OP's "actively buying and selling shares" meant. Day trading. I see now. I'd gained no enlightenment from comparing and contrasting it with passive buying and selling.

The barriers to a successful claim are at least twofold (or, put it another way, HMRC has at least two bites of the "no" cherry). Not only does the loss claimant have to demonstrate that s/he is trading (not, in essence, gambling); s/he also has to get past the loss-blocker tests of commerciality etc. I'm wondering whether the second isn't worse than the first - at first blush, you taken your loss out of the CGT regime into income tax, and then not obtained relief for it.

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By mjshort
06th Nov 2020 13:42

Tax Dragon

Yes, I have clients who are proper traders and fall into income tax rather than CGT - whether they gain or lose!

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By Tax Dragon
06th Nov 2020 14:50

Interesting. I've seen people with large numbers of transactions, but never any categorised (nor categorisable) as trading.

Does it have any other tax impacts? NIC? VAT? Etc. (I've obviously never had to think about that.)

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By Ken Moorhouse
06th Nov 2020 20:54

In future why not use an ISA trading account?
Looking at it from an optimists pov you can then make as big a capital gain as you like then without worry.

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