Share trading Expenses - Tax deductible?

Kinsailor

I am calculating the tax due on share trading via an online broker. Some of this was margin trading : are the margin interest and other trading expenses deductible against capital gains before tax ? Thank You

Marcusm

You need to establish whether you are carrying on a trade in securities or are an investor. Margin interest would only be relievable in the former case. Other transactional expenses would be added to the base cost (in relation to purchases) or deducted from the sales proceeds (relating to sales). From another post, I see that you had 140 transactions in 2013. The nature and frequency of transactions is one of the matters to be taken into account in determining whether you are a trader or an investor. This forum is not the ideal place for that aspect of the consideration.

Kinsailor

Thank you Marcusm for your wisdom : my trading has developed more as a hobby to see if as a personal investor if I can outperform my AVC fund managers. ( My primary (ie 90%) source of income is taxed under PAYE).

My account also had some dividend income (and again many of these shares were purchased via margin borrowing ) : if offsetting against capital gain isn't possible (as I am not really a trader) , would the interest costs be offsettable against the dividend income ?

Thank You

Marcusm

Kinsailor wrote: »

Thank you Marcusm for your wisdom : my trading has developed more as a hobby to see if as a personal investor if I can outperform my AVC fund managers. ( My primary (ie 90%) source of income is taxed under PAYE).

My account also had some dividend income (and again many of these shares were purchased via margin borrowing ) : if offsetting against capital gain isn't possible (as I am not really a trader) , would the interest costs be offsettable against the dividend income ?

Thank You

Unfortunately there are only a few opportunities for a non trader to get tax relief for interest and this wouldn't be one of them. If you are regularly using leverage in your strategies, you should consider CFDs as opposed to margin trading. The economics will be the same (or perhaps marginally better) but you will effectively get tax relief for the interest as it's wrapped up in the overall return. You might find this curious but it is how things work.

Kinsailor

Thank you again for your very constructive feedback : had never considered CFDs but given the potential benefit involved it may now be worth a bit of education on my part . (ps I really appreciated the very fast feedback - You are a really valuable contributor to Boards )