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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15917
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am a retired Doctor resident in UK, my only income now

Resolved Question:

I am a retired Doctor resident in UK, my only income now is my NHS pension.
In October 15 I opened 2 US trading accounts, (small at present!) funded from UK savings
Initially they made a loss but they are starting to become profitable!
I trade, almost exclusively, Futures (on US stock indexes) & options on US stocks
For both my brokerage accounts I filed a W-8BEN Form (for US tax reduction for non US residents)
If my accounts show a loss on April 4th 2016 I presume I do not need to declare them to HMRC is that correct?
If I make a profit but do not wire money from the accounts do I need to declare that to HMRC? (at the moment I am trying to build up the accounts not realise profits!)
If the accounts made a reasonable profit & I wired money back to the UK my understanding (as I trade only Futures & options) is that I should declare a capital gain on a foreign investment is that correct? So I could use my yearly capital gain allowance before paying tax?
In calculating the capital gain I presume I can deduct all costs directly related to trading (platform fees, data feeds, transaction costs etc are automatically deducted from my accounts by my brokers) but can I also deduct other direct trading costs such as fees to information services, indicator costs, cost of on-line training courses etc?
If I made a large profit would this still be regarded by HMRC as a capital gain?
Many thanks for your help
Richard Hatfield
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. You need to disclose your realised gains and losses for a tax year if the total disposal proceeds exceed £44,000 regardless of whether you have made gains or losses or the gains exceed £11,100, the current annual CGT exemption. You need to claim net losses for a tax year via your tax return within four years of the end of the tax year. If you don't, you cannot use them against gains made in future tax years. You do not need to report paper gains or losses, ie unrealised gains or losses. Whether or not you repatriate the gains into the UK is irrelevant. You are taxable on your worldwide income gains assuming you are a UK national. Foreign capital gains are disclosed in the same way as UK capital gains. The annual CGT exemption is applied to the overall net gains. If you make a large gain, you will still pay CGT. As you have a guaranteed income source, your NHS pension, which is probably larger than your gains at least for now, you should not be treated as a full time trader which would make your gains subject to income tax and NIC if you are under 65. I know people who have a full time day job and make twice as much trading stocks etc as they earn but they only pay CGT. HMRC is wary of taxing traders gains as income because of the downside of having to allow losses to be offset against income sources such as a pension in your case. Other full time traders disclose their gains as income so as to be able to pension them. There is more information on financial traders and tax here. As far as costs are concerned, you can only claim those costs related to dealing, ie the transaction costs. Your platform fees, data feeds, information service fees, indicator costs and training costs are not deductible. Take a look here for information on Capital Gains Tax. I hope this helps but let me know if you have any further questions.
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