Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie

Tax on (Complicated) equities trading for PAYE worker

Options
  • 21-02-2021 5:01pm
    #1
    blurtle
    Registered Users Posts: 14 ✭


    I am a PAYE worker, until 2020 all my income came from there. In 2020 I started trading US equities online with Degiro (Shares only). I made a respectable unrealised profit and I see it being a material part of my retirement funds in 26 years to retirement or earlier, so I don't want to mess up the tax on it. I still earn PAYE income and have a pension plan separately.

    I have a computer programming background so I chewed up the account statement and calculated the amount due in tax, it'a a little over TFA which was my intent. There'll be a small amount from dividends too.

    I consulted an online tax service, and they responded with the promise of a "Flat fee", however when I read the fees schedule I see they charge €70 "Per disposal", which I'm guessing means on every sell. Because I have been "trading" the account statement is very lengthy and I might end up owing 17ooo to report what might be a 5ooo realised profit, so clearly that's not going to work.

    Option A:

    I am willing to learn and found this book: 'How to prepare your UK self assessment tax return: 05 April 2020 tax year edition' However that clearly won't help me here in the Emerald Isle (Is there an equivalent for Ireland that covers share trading).

    Option B:

    I AM willing to pay an accountant for advice or to calculate/submit the return, but I can't pay €70 for every sell.

    Option C:

    What do you advise?
    Tagged:


Comments

  • Options
    #2
    Geuze
    Registered Users Posts: 13,110 ✭✭✭✭Geuze


    If it is not your day to day business, then the taxes are as follows:


    (1) CGT on any taxable gains made if you dispose of shares

    (2) income tax on any dividend income, you include this in your normal annual Form 12 tax return


  • Options
    #3
    Geuze
    Registered Users Posts: 13,110 ✭✭✭✭Geuze


    Obviously, if your capital gains are unrealised, as you say, this means you haven't sold any shares, and made an actual gain, so no CGT is due.


  • Options
    #4
    blurtle
    Registered Users Posts: 14 ✭blurtle


    Geuze wrote: »
    Obviously, if your capital gains are unrealised, as you say, this means you haven't sold any shares, and made an actual gain, so no CGT is due.

    No, in addition to unrealised profit I have realised about 5000 plus small accidental dividends. Also remember I have never made a tax return before so this IS rocket science to me.


  • Options
    #5
    Geuze
    Registered Users Posts: 13,110 ✭✭✭✭Geuze


    Ok, so you may owe CGT on the capital gains.

    Here you go:

    https://revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/index.aspx


  • Options
    #6
    Geuze
    Registered Users Posts: 13,110 ✭✭✭✭Geuze


    The dividends are included in your regular income tax return, along with any medical expenses, other income, etc.

    You submit this tax return through your Revenue MyAccount.

    https://www.ros.ie/myaccount-web/register.html?execution=e1s1


  • Advertisement
  • Options
    #7
    Geuze
    Registered Users Posts: 13,110 ✭✭✭✭Geuze


    By the way, it unusual that a 40 year old has never submitted a tax return.


  • Options
    #8
    Seve OB
    Registered Users Posts: 15,846 ✭✭✭✭Seve OB


    Geuze wrote: »
    If it is not your day to day business, then the taxes are as follows:


    (1) CGT on any taxable gains made if you dispose of shares

    (2) income tax on any dividend income, you include this in your normal annual Form 12 tax return

    Remember the 1270 per year exemption


    And dividends received will most likely be net of withholding tax which will mean that the tax bill won’t be as big as one might think


  • Options
    #9
    Seve OB
    Registered Users Posts: 15,846 ✭✭✭✭Seve OB


    Geuze wrote: »
    By the way, it unusual that a 40 year old has never submitted a tax return.

    I wouldn’t think so.
    Most people would be just PAYE workers so would never have to worry about a tax return


  • Options
    #10
    Geuze
    Registered Users Posts: 13,110 ✭✭✭✭Geuze


    Seve OB wrote: »
    I wouldn’t think so.
    Most people would be just PAYE workers so would never have to worry about a tax return

    How do they claim for medical expenses?

    I presume thousands upon thousand claim for medical expenses each year?

    Any claim for medical expenses generates a Balancing Statement, which is a tax return.


  • Options
    #11
    blurtle
    Registered Users Posts: 14 ✭blurtle


    Geuze wrote: »
    By the way, it unusual that a 40 year old has never submitted a tax return.

    No, I just mean I've been PAYE for 20 years, I've never had income from other sources, so my employers have submitted everything.

    But thanks, I'll review the links.


  • Advertisement
  • Options
    #12
    barneystinson
    Registered Users Posts: 4,683 ✭✭✭barneystinson


    I'm confused.

    When you say trading shares, what do you mean? Are you investing (buying and generally holding), or trading (buying and selling and repeating)?

    When you say you have unrealised gains, what do you mean, exactly?

    The actual facts are always paramount in tax. As a computer programmer you should absolutely understand that if you give substandard input you'll get garbage out.


  • Options
    #13
    Seve OB
    Registered Users Posts: 15,846 ✭✭✭✭Seve OB


    Geuze wrote: »
    How do they claim for medical expenses?

    I presume thousands upon thousand claim for medical expenses each year?

    Any claim for medical expenses generates a Balancing Statement, which is a tax return.

    Fill in a med 1form. It’s not a tax return, it’s just claiming credits.

    For years I used to claim tax relief on college fees. All I ever did was send a letter in with copies of receipts so as above I was just claiming tax credits and not submitting a tax return.

    A balancing statement p21 is not a tax return

    Though in fairness I don’t think you can do a med 1 anymore and you have to submit via my account on revenue.ie which walks you through a tax return.


  • Options
    #14
    Seve OB
    Registered Users Posts: 15,846 ✭✭✭✭Seve OB


    barneystinson wrote: »
    When you say you have unrealised gains, what do you mean, exactly?

    Fairly obvious I would have thought. He bought them at a tenner, they are now worth a score but he hasn’t sold them yet


  • Options
    #15
    [Deleted User]
    Posts: 5,121 ✭✭✭ [Deleted User]


    Seve OB wrote: »
    Fairly obvious I would have thought. He bought them at a tenner, they are now worth a score but he hasn’t sold them yet
    The OP sounds reasonably well informed, but I have had conversations with similar people before, who couldn't see that buying and selling on a platform could generate a tax liability. They thought it only mattered if they say returned a gain to their current account or something.

    Not everyone is clear on terms.


  • Options
    #16
    relax carry on
    Registered Users Posts: 4,072 ✭✭✭relax carry on


    Seve OB wrote: »
    Fill in a med 1form. It’s not a tax return, it’s just claiming credits.

    For years I used to claim tax relief on college fees. All I ever did was send a letter in with copies of receipts so as above I was just claiming tax credits and not submitting a tax return.

    A balancing statement p21 is not a tax return

    Though in fairness I don’t think you can do a med 1 anymore and you have to submit via my account on revenue.ie which walks you through a tax return.

    Med 1 forms are almost totally phased out as are paper returns. Pretty much everything for a PAYE taxpayers is via Revenues MyAccount selecting the appropriate year and filling a tax return to claim health expenses. Receipts are uploaded via the tracker as appropriate. A P21/statement of liability is the result of you filing a tax return.


  • Options
    #17
    relax carry on
    Registered Users Posts: 4,072 ✭✭✭relax carry on


    Seve OB wrote: »
    Fairly obvious I would have thought. He bought them at a tenner, they are now worth a score but he hasn’t sold them yet

    Not necessarily. I've encountered quite a few individuals who believe that unless the money hits your bank account, those are unrealised gains. The same for dividends reinvested. Some people have belief that unless the dividends hit your bank account then there's no tax liability.


  • Options
    #18
    blurtle
    Registered Users Posts: 14 ✭blurtle


    So yes, in answer to earlier questions, I have invested with a long term strategy however because of market volatility I have sold shares at a profit at times. This has resulted in a total 5 grand realised gain for 2020 and larger unrealised gains. Realised or unrealised I have not withdrawn from the account, but reinvested the gain, though I didn't mention that point (Sorry) because I thought withdrawal wasn't relevant.

    Because I have traded and it looks like the online tax service asks €70 "per disposal" I'm guessing I either need to hire an accountant by the hour and provide him/her my digested account figures then take their advice on submitting the whole thing to the revenue online service. Or I could learn a lot more and do it myself.

    I'm not asking for free accountancy services which is why I haven't explained every minute detail, but just a direction to go in would be a help.

    Thanks for all replies.


  • Options
    #19
    Geuze
    Registered Users Posts: 13,110 ✭✭✭✭Geuze


    blurtle wrote: »
    So yes, in answer to earlier questions, I have invested with a long term strategy however because of market volatility I have sold shares at a profit at times. This has resulted in a total 5 grand realised gain for 2020 and larger unrealised gains. Realised or unrealised I have not withdrawn from the account, but reinvested the gain, though I didn't mention that point (Sorry) because I thought withdrawal wasn't relevant.



    I'm not asking for free accountancy services which is why I haven't explained every minute detail, but just a direction to go in would be a help.

    Thanks for all replies.


    No need to hire an accountant to do a CGT return.

    Ask for help here, or on AAM.


    First job - calculate the capital gains made.

    Determine any buying and selling costs

    Are there any past capital losses to be brought forward?


  • Options
    #20
    Geuze
    Registered Users Posts: 13,110 ✭✭✭✭Geuze


    relax carry on wrote: »
    . A P21/statement of liability is the result of you filing a tax return.

    Yes, a P21 is the outcome of submitting a tax return.


  • Options
    #21
    Seve OB
    Registered Users Posts: 15,846 ✭✭✭✭Seve OB


    Geuze wrote: »
    Yes, a P21 is the outcome of submitting a tax return.

    Anybody can ask for a P21 balancing statement so it is not just the result of submitting a tax return


  • Advertisement
  • Options
    #22
    Seve OB
    Registered Users Posts: 15,846 ✭✭✭✭Seve OB


    relax carry on wrote: »
    Med 1 forms are almost totally phased out as are paper returns. Pretty much everything for a PAYE taxpayers is via Revenues MyAccount selecting the appropriate year and filling a tax return to claim health expenses. Receipts are uploaded via the tracker as appropriate. A P21/statement of liability is the result of you filing a tax return.

    Did you even read my post?


  • Options
    #23
    barneystinson
    Registered Users Posts: 4,683 ✭✭✭barneystinson


    Seve OB wrote: »
    Fairly obvious I would have thought. He bought them at a tenner, they are now worth a score but he hasn’t sold them yet

    +1 to what Pg633 replied.

    You'll frequently find people misunderstanding what a realised / unrealised gain is. If you don't believe me pop over to the threads about gains on crypto - on a regular basis there's someone going nuts over the fact that everytime they trade one crypto for another, they're realising a gain (or loss) that needs to be accounted for.


  • Options
    #24
    Seve OB
    Registered Users Posts: 15,846 ✭✭✭✭Seve OB


    Geuze wrote: »
    No need to hire an accountant to do a CGT return.

    Ask for help here, or on AAM.


    First job - calculate the capital gains made.

    Determine any buying and selling costs

    Are there any past capital losses to be brought forward?
    Agree with this. CHT really is quite simple, but you need to understand how it operates. But once you do OP, it is something you can do yourself. You could get an accountant to do it for you for your first year, rather than per trade as you were mentioning, I’ve no idea on the fees, but once you have a bit of a maths head on your shoulders (which you obviously do as you are trading) you could probably look at what they have done and replicate it. Of course that is as long as it is all straight forward stuff with no red herrings thrown into the mix to confuse you

    However I’ll throw this out there, could there be a case if the OP is highly involved in the trading that the idea of capital gains would be defunct and he would be subject to income tax?


  • Options
    #25
    davindub
    Registered Users Posts: 1,447 ✭✭✭davindub


    Seve OB wrote: »
    Agree with this. CHT really is quite simple, but you need to understand how it operates. But once you do OP, it is something you can do yourself. You could get an accountant to do it for you for your first year, rather than per trade as you were mentioning, I’ve no idea on the fees, but once you have a bit of a maths head on your shoulders (which you obviously do as you are trading) you could probably look at what they have done and replicate it. Of course that is as long as it is all straight forward stuff with no red herrings thrown into the mix to confuse you

    However I’ll throw this out there, could there be a case if the OP is highly involved in the trading that the idea of capital gains would be defunct and he would be subject to income tax?

    It is possible that trading stocks would constitue a trade, but it is unlikely in cases like this.

    Regarding the tax return, where someone buys shares in a single entity on a single occasion and sells all the shares in a single occasion, the return is relatively simple. But where shares are bought in tranches and/ or sold in the same way, it gets a little more complex to account for.

    70 per trade may be excessive for multiple trades, but I think a lot of accountants would do the entire return for a much lower rate.


Advertisement