So say you didn't sell your shares for 20 yrs and your investment had grown to a million you'd have to pay nearly £200000 in tax! 😲 It doesn't seem fair that you get an allowance each year of £12,300 but if you don't sell your shares for 20 yrs you only get one allowance of £12,300. Thank god for an ISA 😄
@@2711marcus Yep - that's how they get you :) There are definitely smart ways around it - for example you can pocket the £12,300 every year in capital gains from an S&P 500 portfolio (e.g. VUSA) and then go buy a different asset like the iShares equivalent immediately after - technically you're trading different assets there and I am sure rich people have a million other smart methods :)
Thanks for your video 👌🏻. I’ve had a share save for years and this is starting to melt my brain as shares were bought at different prices every month 🤯
Love the fact people identified how complex capital gains tax can be and entered anything left out in the comments. Shows it’s a great community! Definitely subscribing
Excellent explanation. Interestingly the HMRC example i was looking at today (HS284 example 3) only deducted the selling costs when calculating a capital gain from selling a portion of shares from a pool. No mention of how to deduct a portion of your buying costs from your gain at all. Thanks for clarifying that
You’ve missed a few things out like you can use your CGT allowance every year by selling one group of stock to realise a profit just under the allowance and buying an ETF with a similar mix of shares in it. Then 31 days later you sell that ETF and rebuy the original stock. The average cost of your shares in that stock is now higher by an amount equal to your allowance effectively meaning that you roll the allowance forward. Or you can simply have two funds that you switch between. It can also be useful to crystallise a loss if you have a mixed portfolio with one part down and one part up so that you cancel it out. Again doing the ETF/fund shuffle to get around the bed and breakfast rules.
Not really for certain people. What about the day trader who trade thousands in a year making having gain and loss in more than 100 different stocks using money? I doubt anyone will be able to trace it. I also doubt any trader will ever do that. The amount of time that you need to spend comparing to the gain you have made does not make it worthy.
Hi Sasha, I find myself revisiting your videos over and over again for how easy you make it to understand all of the complexity of investing. If you are still checking this comment section, it would be great if you could shed some light on the following situation. If in one year you make a decent amount of realised profit with one company but your current open position is at a loss, is it worth realising this loss to offset the gains before the tax year ends? Because of this bed and breakfast rule, do we have to sit 30 days on the realised loss before buying back the same shares?
Thanks Sasha. I first watched this video not long after you released it. Afterwards I was hoping there'd be some sort of tool (or AI bot?) that would help do all the donkey work (plus I got lost when trying to capture each exchange rates per time of purchase). This may be me being very hopeful, but does anyone know if such a tool exists yet?
Thanks Sasha, you are a legend!! two questions 1) About the deducting losses. so if in year one i made a loss of 10k and year 2 i made a gain of 20k that would mean i don't have to pay any capital gains? 2) Option trading: Does the same math applying to option trading, mainly in buying and selling the premium?
Hey Sasha. Big fan of your vids 🙏🏼 I think you once mentioned a way to invest in the ARK funds from the UK? If so it would be great if you could make a vid about that. I think it would be popular 👍🏼 Thanks
Yep - the only way really is through eToro by buying them as a zero leverage CFD. This means you don’t pay any extra fees OR carry the leverage risk but it also means you do not own the underlying asset - no actual ARKK shares. Just contracts based on them and that has its own risks. Feel free to use my affiliate link if you want to sign up with eToro (in the description). Absolutely no benefit to you but it also doesn’t cost you anything either :))
The guidance here is definitely confusing as different parts of the GOV sites & papers say different conflicting things. Some will say you don't have to submit if you have made less than £12,300 gains but you are right - the questionnaire they have says the £10k question so... I always say that it's better to do it regardless because it really is not that complex and it makes sure you won't ever have any issues - I filled them in before I had to myself.
@@XxXx-rn2fe That's a good thought that :) Could hold some water but I have no idea. I just like the idea of doing it so that I know for sure where I stand regardless. Also if THEY owe you money (like if you overpaid on income tax), then you get to have your cheque a year or two earlier than you otherwise would which is a big plus in my books :)
Hi Sasha, really enjoyed your video really informative. Thank you very much. Is there any software that you know of that might help to work out capital gains in the UK with stocks and shares? Or is there any excel sheet example that you could show me, as I’m really struggling with my capital gains.
Thanks, it really informative. I just wonder What about the day trader who trade thousands in a year making having gain and loss in more than 100 different stocks using money? I doubt anyone will be able to trace it. I also doubt any trader will ever do that. The amount of time that you need to spend comparing to the gain you have made does not make it worthy. Could you not just see what you have originally in the account on the start of the tax year and see how much you gain by the end of the tax, given no money is added??
There are some slightly different rules that apply to multiple transactions both ways on the same day, but most actual professional traders will have proper tracking software that will do this pretty much automatically...
thankyou for the great video. Do you have any videos which explain the bed and breakfast rule. In your example after selling 10 shares at 150 what happens if he repurchases 10 (more) shares at 130 within 30days? How does it affect cost basis and capital gains calculations... Thanks in advance
Thanks a lot on the video for Information sharing. Same year share A sold with lost, can it offset / deduct from the profit for Share B sold with big profit?
I have a questions that always confuses me - difference between short term and long term CGT in UK. So if I buy US shares from ETORO UK in June 2024 and sell them with profit in October 2024 what taxes I pay ? Thank you 🙏
Thank you for the very useful video. Are we allowed to offset capital loss from shares trading with capital gains from property sales, do you know please?
Hi Sasha, thanks for the videos- very helpful! I have a question about the dividend allowance. This year I have exceeded the £2000 allowance, however my income from earnings has been £0 (student). Would the excess dividend earnings fall under my £12,570 personal allowance or will I still need to pay dividend tax? Thanks!
Hey Sasha, great video. It seems you may have missed the matching principle when selling shares?, in that shares you dispose of go against shares bought (in the same co) in the following order: 1) same day as date of disposal 2) within the following 30 days and then 3) against the share pool (which you talk about here in your video). It may be just a watch out. Its a complicated beast which is why I just look to hold for long term, invest in an ISA and trade as infrequently as possible.
I didn’t talk about it for a reason - same day stuff applies to traders and I don’t talk about trading - all about long term investing on here. I also talk about Bed and Breakfasting which is the 30 day rule in your list. I had to try and keep the video short and on point so that’s why the first point didn’t make it into the content.
@@SashaYanshin Ahh ok makes sense, Maybe you just need to change your date you sell the 10 shares in June 2021 in your last example, as I am thinking this falls in the 30 day window when you say you purchased 10 shares in May 21? and therefore you cannot use the share pool and need to deduct the 10 shares in May straight from this?
Good point - I think I wrote July in my notes especially because of this reason but didn’t look at the notes properly when talking. Good spot! Unfortunately no way to edit the video now but it’s a pretty minor point.
Since the 24/25 CG allowance is so low (only £3k), I'm wondering if I'm sailing into danger of owing CGT when transferring shares from a non-ISA account into an associated ISA wrapper. On the face of it, you only need ~15% gain since buying the shares to broach the £3k limit on a £20k transfer, quite easy to achieve over a decade or so since inflation isn't allowed for. Just wanted to confirm that the 30 day (a.k.a. bed and breakfast) rule covers this sort of situation. Basically, the shares are sold, bought back by the ISA, well within 30 days (normally on the same day) so CGT would only be due on the difference between the buy and sell price (which has been zero every time I've done it), As an aside, the video didn't mention that dividend payments for accumulation shares count as a "purchase" so adding to the pooled cost of shares and so reducing CGT when you finally sell them.
Answering my own question, I've been looking on line, and transferring shares into an ISA is regarded as a sale, followed by an immediate buy. Same day and 30 day rules do NOT apply, so at the moment of sale you become liable for CGT if your gain exceeds £3k (call it 15% gain on a £20k transfer to an ISA). There are some exceptions for things like employee share schemes, but not for retail share holders.
Hi Sasha, 1) how does it work the tax wise, if I pull my money but now instead of gains I pull it with a loss? How does the hm revenue sees this? 2) this £12k allowance has nothing to do with your £20k allowance for the stocks &shares ISA, does it?
I would much rather have it where my entire profits/losses over an entire portfolio is what is taxed. In businesses, if you make a loss in one department but a small profit in another department, the overall company profits are in the red, so you wouldn't pay anything on the small profit in one department. Makes no sense why we don't do the same with stocks. I invested in 5 stocks. Lost in 3 and profited in 2. I should calculate whether or not I made a net loss or profit of all of them instead of the government coming in to take profits and ignoring all the risk I have to take and losses I acquire as part of the journey.
@@thomaschilds8781 To prevent people from cashing in their £12,300 gain in a tax year, then buying those same shares right back - basically to allow rich people to automatically take the full 0% amount every year with zero risk. :) So there is a good point to it but I feel with the modern trading timelines it may be a little outdated already.
Very helpful video. As an investment noob, I think I'll stick to S&S ISAs for now. Capital gains interacting with income is a whole new level of crazy that I hadn't anticipated. It's already a nightmare income tax wise, calculating and making decisions on gross salary; pension contributions and giving, and interaction with the child benefit taper.
It’s definitely complex. Don’t get me started on the order of taxation when you throw in dividends and savings income as well - becomes all kinds of difficult to figure out. As in - which bit gets to benefit from the lower tax bands in which order!
Very clear explanation. I would like to ask where to find the exchange rate for say, GBP to USD or HKD or other currency that is say, 10 or more years ago? Did HMRC have a list of exchange rate for us to use? It is sometimes difficult to find exchange rate to the exact date of buying the shares. Is this principle also apply to regular investment, let's say a fixed amount for each month by selling partially, then continue the monthly regular investment?
@@SashaYanshin Thanks a lot, do you need to keep screenshot record of the exchange rate so that if HMRC are questioning which exchange rate you used in your calculation of capital gain?
an excel sheet does sound like the best/easiest option... here's a thought/question, though... do you actually need to keep a record of all transactions in that sheet? it sounds like for each stock/company you're invested in, you just need to keep track of the average buying price, number of shares and any broker fees... and you just update that every time you buy more of that stock/company... does that sound right? another question: what do you do with fees on transferring money to the platform (since these fees aren't tied to any one stock... and kind tie to all subsequent transactions)?
Not really for certain people. What about the day trader who trade thousands in a year making having gain and loss in more than 100 different stocks using money? I doubt anyone will be able to trace it. I also doubt any trader will ever do that. The amount of time that you need to spend comparing to the gain you have made does not make it worthy.
@@adiadindas Not really to which bit exactly? Whether you need to keep a record of all transactions? Or whether it's enough to just keep track of the average buying price, number of shares and broker fees? (a "yes" to one is probably a "no" to the other) but also, if a day trader does 10,000 trades in a year... that's just 40 per day. If you have a working sheet/tool, then adding those in would only take minutes at the end of your trading day, wouldn't it? (i'm no day trader, though, so this is just my speculation).
The guidance is that details of the actual transactions have to be kept in case the HMRC disagrees with you etc. Professional day traders will have systems/processes in place that are going to be better than Excel and with respect to indirect fees - that is a very good question. And one that I think you'll have different accountants interpreting differently as to how/if you can apportion those :)
With my broker they issue an annualised statement of my account. Can i use this to pay my tax at the end of the year if it is above £12300? Many thanks for the video btw
Hi Sasha, if you buy on Year1 and sell on Year 4 and lets say total gains of 30 K, Now since 12300 per annum is tax allowance so that makes my allowance to 12300 X 4 so i should not be paying any capital gain tax right ? Also, does it mean that if i buy the same mutual fund again after 30 days it will force HMRC to calculate 12300 allowance every year ? Effectively i just need to take 1 month holidays on my investment in the same mutual fund. Thank you
Nope - the gains are not spread over years during which you haven't used it. So if you hold for 4 years without selling, then sell after, you still only get 1x £12,300 allowance for that year.
Hi Sasha, how would it work in the case of stocks and shares ISA? You have 20000 allowance for a year and let’s say buy some shares for 10000. These shares raise in value to 20000. Let’s say you sell them for 20000 and keep the money in the same investment account without cashing out. This all happens in the same tax year. Can you then use that 20000 to buy the same of different shares couple of months down the line without affecting your allowance for that same tax year? Can you put additional 10000 into your account the same tax year and buy more shares? I guess the question comes down to this: if you put 20000 can you buy and sell shares multiple times for profit even if the value of shares goes over 20000 because of your profitable trades? I hope it makes sense.
Yep Mario - the allowance is for deposits only. If you deposit £10k and it becomes £100k. You can STILL deposit another £10k in the same financial year. You can then sell and buy different stocks, etc within the ISA as much as you want for as long as you want - even if you open a different ISA for the next financial year elsewhere because the limit is on depositing only. 👍
Ha now im intresting what hapen if i dont pay gains tax i just ignore this what gov gona do contact me i have to pay it or 2 3 years later they gona contact me or they dont see me gains in stock market ??? how its work if i ignore tham ???????
So your question is... what happens if I ignore the law and don't pay my taxes? That's an interesting question that I definitely am not the right guy to answer but I most certainly will never recommend taking that approach.
Could you do an update on what trading apps to use for a young investor wanting to invest around £1000 as trading 212 is now being funny, also want to get into some crypto. Cheers 👍
I have done a fair few videos recently on the topic - best Stocks & Shares ISAs, cheapest investing apps, etc. Think those cover it pretty comprehensively - check them out!
The market does vary though - I presume you are talking about skimming the % return off the top every year on average. But then there's inflation and what if you need to draw down the whole lot or a larger chunk in one go - a few things to think about. Having said that I generally do agree that people underestimate the effectiveness of the £12,300 tax-free CGT allowance.
@@SashaYanshin Indeed, and I hear everyone here saying ISA ISA, the reality is that this is useful if you have already maxed out your ISA and don't want to put the money on a SIPP which will not be accessible in later stages of your life. With the bed and breakfast you can basically milk the % return up until 12k a year which if you consider a normal year to be between 6-10% is quite common. I do agree that it is best to do it all in one lump sum investment otherwise it's hard to work out
Trading212 has a Realised Profit figure. Can you not use that for your self assessment? It should already include all those calculations for net profit
Not really no - that figure will not accurately calculate your average buy price for the disposal calculations and it adjusts over time as you exit positions and reuse the money to enter new ones rather than keep a continuous tally.
It is all clear but I am a bit confused when actually you realize your profit. Let's say you have an account at an online broker and once you sell the stock you end up with some profit. Is it realised and I am required to report it for a capital gains tax when I transfer the profit to my actual bank account? If I buy another stock straight away with that small profit without taking it out from the broker account, do I still need to report is as a capital gains? Thanks.
The point of realisation is when you sell. Even if you immediately go and buying something else that doesn't matter. Each disposal has to calculate what the gains on it were and every sell of shares is a disposal. Of course - there's all the extra rules about bed and breakfasting too...
@@SashaYanshin Thanks I got it. What I wanted to learn is if I still need to report a capital gains if I keep the profit in the brokers account and not transfer anything to my bank account?
@@SashaYanshin Hi, I buy and sell shares very frequently on etoro and I have realised a profit of around £1100, do I have to report this to HMRC? I mean it's way below the CGT allowance, do I have to do the self-assessment?
Hmm, ok so let's see, if you for some odd reason quadruple your investment somehow, say from 10.000 to 40.000, in order to avoid paying tax on that gain in your ISA, you could partly sell your shares in different years?? like sell 10.000 worth each tax year after that? (what if you move those gains instead of withdrawing them into dividend non-volatile stocks?)
How does it work with free shares, as an example I got a free share worth £5 with freetrade. I cashed out on it, so I made £5 without spending money. How does this effect capital gains tax?
Technically it works like this: 1. You get a free share - check the report on the free share for the exact price at which you got it. That will be treated as Income and subject to the relevant income taxes, etc. 2. You then disposed of the share at a point in time after receiving it. The gain between when you received it and sold it is the Capital Gains bit :) But then again that's just my opinion so do your own research! 😂
@@littledanmcnamara1840 Well on the Capital Gains it'll be offset against any other capital gains when you calc it (if you have any) OR you'll be able to carry it forward for 4 years. However, technically, the free share itself is income and you'd be subject to tax on that but that's one for you to figure :))
If I buy share options through a company sharesave and at maturity I have, say, 20k profits, can I whack it all in an isa within 90 days and then immediately sell and avoid all tax?
@@jakeah1175 Bed and ISA is a weird term because it doesn't really mean much. If you're selling for gains over the threshold, it doesn't do anything to help.
@@SashaYanshin 🤣🤣 that way I can piss people off from beyond the grave. Want my estate ??? (Which won't be much btw), then deal with this + add inheritance tax to the mix 🤣🤣
You do not need to calculate anything for the ISA - no Capital Gains Tax applies. For the regular investing account the way I describe in the video is the way to do it.
@@hbhell If your gain is low and you don't have to fill it out for other reasons (e.g. you are already registered), then no - you don't have to fill it out.
You said you've not found good software so use an Excel spreadsheet. Any chance of sharing that spreadsheet template please? I've made my own, but there are things it doesn't handle well (e.g. selling, splits).
Was thinking of making a version that is a bit nicer looking - the difficulty is that if that version doesn't quite work the right way or makes an incorrect assumption/doesn't account for some specific situation, I could get into all kinds of sticky situations with people getting an incorrect answer out of it - Gonna have a think on this one.
Do u HAVE to use avg buy price when disposing of a share? So e.g. if u bought 10 of share A at 100 amd 200 and then sell 15 of share A at 300. Can u claim u made profit of 2000 {10(300-200) + 5(300-100)} with 5 of share A leftover (bought at 100)? Or do u HAVE to claim it was bought 20 of share A at the avg of 150, where profit would be 2250 {15(300-150)} with 5 of share A leftover (bought at 150 avg)?
@@SashaYanshin ahh that sucks. Said on gov website that pooling "allows" you to use avg price of all shares bought (ie thought was optional). Ty for reply!
@@alaboulangerie There’s a big difference between a series of trades on the same day and long-term here which is maybe where you’re seeing the difference.
Not used them but isn't it just an outsourced tax accountant service? I have a feeling that for that fixed fee they won't be going through thousands of transactions manually and match them, etc. I would guess the bulk of that work will be on you regardless.
Why can't we just use the purchase price of all the individual buys? I use eToro and I can see all the different times and prices I've bought at and it is very simple to track it when I close the trade. The average method completely messes it up.
Hey Is skrill is good? And If I did withdraw from trading 212 to skrill and after that I want to send my money from skrill to revolut account I mean can I do that ?
I don't know - I don't use them and generally avoid using accounts that try to mimic bank accounts but operate under an e-money licence because I do not like the setup, protections and risks associated but each to their own :)
Surely, it's easier to incorporate stamp duty and transaction fees into the book price per share for each transaction entry into your spreadsheet? So, your cumulative book price is total cost and you don't need to recalculate fees and taxes each time you have to enter a sell transaction.
It depends - some are proportionate in which case yes - it does make sense. But ones which are not proportionate (eg fixed transaction fee) won’t work if you do it that way although I guess you could just notify everything on a per share basis.
@@SashaYanshin Interesting, I just divide my total transaction cost by number of shares to get my book price per share, and then the cumulative total purchase cost divided by the total number of shares purchased is calculated automatically in the spreadsheet. This means that my fixed fee is divided by however many shares I purchase in each transaction.
@@AnjleeBhatt Good! Was pointing out that if you have different platforms where the fees work differently, you'll be doing it in different ways but it's definitely a good way based on what I understand from your post. The point of the video is to explain the principle of how you'd do the actual calculation - the specifics of how are a whole other topic :)
@@adiadindas I think you misunderstood my point. My point is if you buy share in one company - buy a single large investment rather than many smaller ones beause it will get more complicated when calculating your taxes
Save yourself the hassle and use a S&S ISA. Or if you're fortunate enough to be able to invest more than £20k a year, then you should be able to afford a tax accountant 🙂
Hi Sasha, great video, thanks! One thing confused me: It seems for the calculation of the capital gains at time stamp 7:12 you simply deduct the average buy price (£86.25) from the sell price. That average buy price does not seem to take into account the prior sale of 10 shares @ £100. However, when looking at the official example from HMRC under the following link, they instead use a "pool of cost" approach which does take into account prior sales as well, not only the average buy price. Was wondering which of the two is correct? Thanks again. assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/972646/HS284_Example_3_2021.pdf
It does take it into account - look at the numbers closely. You first bought 10 shares at £60 and another 30 shares at £80. Average buy price of those shares: £75. You then sold 10 of those shares, so you are left with 30 shares total at an average of £75 (was 40 shares before the first sell). So in the final calculation you have those original 30 * £75 + the shares you bought after to work out the new average price. 👍
This will definitely not confuse anyone for sure.
Outstanding work keeping me engaged and understanding it all until the end! 👍
@@neillcain6887 Thank you! :)
Thanks so much Sasha, I have been looking for so long for a video on this, with exactly this level of detail. Absolutely outstanding work Sir!
So say you didn't sell your shares for 20 yrs and your investment had grown to a million you'd have to pay nearly £200000 in tax! 😲 It doesn't seem fair that you get an allowance each year of £12,300 but if you don't sell your shares for 20 yrs you only get one allowance of £12,300. Thank god for an ISA 😄
@@2711marcus Yep - that's how they get you :) There are definitely smart ways around it - for example you can pocket the £12,300 every year in capital gains from an S&P 500 portfolio (e.g. VUSA) and then go buy a different asset like the iShares equivalent immediately after - technically you're trading different assets there and I am sure rich people have a million other smart methods :)
Thanks for your video 👌🏻. I’ve had a share save for years and this is starting to melt my brain as shares were bought at different prices every month 🤯
Love the fact people identified how complex capital gains tax can be and entered anything left out in the comments. Shows it’s a great community! Definitely subscribing
Fantastic, succinct summary of CGT with examples. Brilliantly done and really helpful. Thank you
Excellent explanation. Interestingly the HMRC example i was looking at today (HS284 example 3) only deducted the selling costs when calculating a capital gain from selling a portion of shares from a pool. No mention of how to deduct a portion of your buying costs from your gain at all. Thanks for clarifying that
You’ve missed a few things out like you can use your CGT allowance every year by selling one group of stock to realise a profit just under the allowance and buying an ETF with a similar mix of shares in it. Then 31 days later you sell that ETF and rebuy the original stock. The average cost of your shares in that stock is now higher by an amount equal to your allowance effectively meaning that you roll the allowance forward. Or you can simply have two funds that you switch between.
It can also be useful to crystallise a loss if you have a mixed portfolio with one part down and one part up so that you cancel it out. Again doing the ETF/fund shuffle to get around the bed and breakfast rules.
212 lists details very well makes it easy to keep up with capital gains and also logs the exchange rates at the point of transaction
Yep - that bit they definitely do better than many others and actually better than some expensive platforms based on what I dug up when researching.
Not really for certain people. What about the day trader who trade thousands in a year making having gain and loss in more than 100 different stocks using money? I doubt anyone will be able to trace it. I also doubt any trader will ever do that. The amount of time that you need to spend comparing to the gain you have made does not make it worthy.
@@adiadindas high volume day trading does have some differences that I didn’t go into within this video on how daily aggregation works.
This was really helpful, thanks.
Excellent video Sasha, there are a lot of retail traders not aware of the tax implications of trading shares.
Thank you!
Hi Sasha, I find myself revisiting your videos over and over again for how easy you make it to understand all of the complexity of investing. If you are still checking this comment section, it would be great if you could shed some light on the following situation. If in one year you make a decent amount of realised profit with one company but your current open position is at a loss, is it worth realising this loss to offset the gains before the tax year ends? Because of this bed and breakfast rule, do we have to sit 30 days on the realised loss before buying back the same shares?
Thanks Sasha. I first watched this video not long after you released it. Afterwards I was hoping there'd be some sort of tool (or AI bot?) that would help do all the donkey work (plus I got lost when trying to capture each exchange rates per time of purchase). This may be me being very hopeful, but does anyone know if such a tool exists yet?
Thanks Sasha, you are a legend!! two questions 1) About the deducting losses. so if in year one i made a loss of 10k and year 2 i made a gain of 20k that would mean i don't have to pay any capital gains? 2) Option trading: Does the same math applying to option trading, mainly in buying and selling the premium?
Lucky me that I don't have to go through all this yet.thanks for very informative video.
Ha. Thank you!
If you held shared for 10 years , are you allowed depreciation of money deduction in the calculating the gain.?
Thanks so much for this. Your breakdown with examples really helped me understand how to fill in my self assessment properly!
Glad it was useful!
Hey Sasha. Big fan of your vids 🙏🏼 I think you once mentioned a way to invest in the ARK funds from the UK? If so it would be great if you could make a vid about that. I think it would be popular 👍🏼 Thanks
Yep - the only way really is through eToro by buying them as a zero leverage CFD.
This means you don’t pay any extra fees OR carry the leverage risk but it also means you do not own the underlying asset - no actual ARKK shares. Just contracts based on them and that has its own risks.
Feel free to use my affiliate link if you want to sign up with eToro (in the description). Absolutely no benefit to you but it also doesn’t cost you anything either :))
@@SashaYanshin ok thanks very much for that. If I sign up I'll most definitely use your link. большое спасибо!
Quick question: If you make less than 12300 do you still have to declare it as you are not paying tax on the money?
The guidance here is definitely confusing as different parts of the GOV sites & papers say different conflicting things. Some will say you don't have to submit if you have made less than £12,300 gains but you are right - the questionnaire they have says the £10k question so...
I always say that it's better to do it regardless because it really is not that complex and it makes sure you won't ever have any issues - I filled them in before I had to myself.
@@XxXx-rn2fe That's a good thought that :) Could hold some water but I have no idea. I just like the idea of doing it so that I know for sure where I stand regardless.
Also if THEY owe you money (like if you overpaid on income tax), then you get to have your cheque a year or two earlier than you otherwise would which is a big plus in my books :)
Hi Sasha, really enjoyed your video really informative. Thank you very much. Is there any software that you know of that might help to work out capital gains in the UK with stocks and shares? Or is there any excel sheet example that you could show me, as I’m really struggling with my capital gains.
Thanks, it really informative.
I just wonder What about the day trader who trade thousands in a year making having gain and loss in more than 100 different stocks using money? I doubt anyone will be able to trace it. I also doubt any trader will ever do that. The amount of time that you need to spend comparing to the gain you have made does not make it worthy.
Could you not just see what you have originally in the account on the start of the tax year and see how much you gain by the end of the tax, given no money is added??
There are some slightly different rules that apply to multiple transactions both ways on the same day, but most actual professional traders will have proper tracking software that will do this pretty much automatically...
thankyou for the great video. Do you have any videos which explain the bed and breakfast rule. In your example after selling 10 shares at 150 what happens if he repurchases 10 (more) shares at 130 within 30days? How does it affect cost basis and capital gains calculations... Thanks in advance
Thanks a lot on the video for Information sharing.
Same year share A sold with lost, can it offset / deduct from the profit for Share B sold with big profit?
I have a questions that always confuses me - difference between short term and long term CGT in UK.
So if I buy US shares from ETORO UK in June 2024 and sell them with profit in October 2024 what taxes I pay ? Thank you 🙏
Thank you for the very useful video. Are we allowed to offset capital loss from shares trading with capital gains from property sales, do you know please?
Hi Sasha, thanks for the videos- very helpful! I have a question about the dividend allowance. This year I have exceeded the £2000 allowance, however my income from earnings has been £0 (student). Would the excess dividend earnings fall under my £12,570 personal allowance or will I still need to pay dividend tax? Thanks!
Hey Sasha, great video. It seems you may have missed the matching principle when selling shares?, in that shares you dispose of go against shares bought (in the same co) in the following order: 1) same day as date of disposal 2) within the following 30 days and then 3) against the share pool (which you talk about here in your video). It may be just a watch out. Its a complicated beast which is why I just look to hold for long term, invest in an ISA and trade as infrequently as possible.
I didn’t talk about it for a reason - same day stuff applies to traders and I don’t talk about trading - all about long term investing on here.
I also talk about Bed and Breakfasting which is the 30 day rule in your list.
I had to try and keep the video short and on point so that’s why the first point didn’t make it into the content.
@@SashaYanshin Ahh ok makes sense, Maybe you just need to change your date you sell the 10 shares in June 2021 in your last example, as I am thinking this falls in the 30 day window when you say you purchased 10 shares in May 21? and therefore you cannot use the share pool and need to deduct the 10 shares in May straight from this?
Good point - I think I wrote July in my notes especially because of this reason but didn’t look at the notes properly when talking.
Good spot!
Unfortunately no way to edit the video now but it’s a pretty minor point.
Since the 24/25 CG allowance is so low (only £3k), I'm wondering if I'm sailing into danger of owing CGT when transferring shares from a non-ISA account into an associated ISA wrapper. On the face of it, you only need ~15% gain since buying the shares to broach the £3k limit on a £20k transfer, quite easy to achieve over a decade or so since inflation isn't allowed for.
Just wanted to confirm that the 30 day (a.k.a. bed and breakfast) rule covers this sort of situation. Basically, the shares are sold, bought back by the ISA, well within 30 days (normally on the same day) so CGT would only be due on the difference between the buy and sell price (which has been zero every time I've done it),
As an aside, the video didn't mention that dividend payments for accumulation shares count as a "purchase" so adding to the pooled cost of shares and so reducing CGT when you finally sell them.
Answering my own question, I've been looking on line, and transferring shares into an ISA is regarded as a sale, followed by an immediate buy. Same day and 30 day rules do NOT apply, so at the moment of sale you become liable for CGT if your gain exceeds £3k (call it 15% gain on a £20k transfer to an ISA). There are some exceptions for things like employee share schemes, but not for retail share holders.
Hi Sasha, 1) how does it work the tax wise, if I pull my money but now instead of gains I pull it with a loss? How does the hm revenue sees this?
2) this £12k allowance has nothing to do with your £20k allowance for the stocks &shares ISA, does it?
And this answers my question of should I open a Freetrade account whilst waiting for the T212 isa 😂
I've been compiling my excel for the last financial year and boy - it is A LOT OF WORK! 😂
So if you have not gone over the 12k in profit then do you still have to do a tax return?
I would much rather have it where my entire profits/losses over an entire portfolio is what is taxed. In businesses, if you make a loss in one department but a small profit in another department, the overall company profits are in the red, so you wouldn't pay anything on the small profit in one department.
Makes no sense why we don't do the same with stocks.
I invested in 5 stocks. Lost in 3 and profited in 2. I should calculate whether or not I made a net loss or profit of all of them instead of the government coming in to take profits and ignoring all the risk I have to take and losses I acquire as part of the journey.
Thanks a lot for this! The bed and breakfast stuff is for sure the part that confuses me the most. Great video though!
Thanks Valentina - hopefully explains it well enough! :)
It seems like a huge loophole for rich and risky people to exploit. Why does the B&B rule exist at all?
@@thomaschilds8781 To prevent people from cashing in their £12,300 gain in a tax year, then buying those same shares right back - basically to allow rich people to automatically take the full 0% amount every year with zero risk. :)
So there is a good point to it but I feel with the modern trading timelines it may be a little outdated already.
@@SashaYanshin Indeed, for example sell all LifeStrategy 60% and then allocate 50% to LS 40 and 50% to LS 80, job done 😃
Very helpful video.
As an investment noob, I think I'll stick to S&S ISAs for now.
Capital gains interacting with income is a whole new level of crazy that I hadn't anticipated. It's already a nightmare income tax wise, calculating and making decisions on gross salary; pension contributions and giving, and interaction with the child benefit taper.
It’s definitely complex. Don’t get me started on the order of taxation when you throw in dividends and savings income as well - becomes all kinds of difficult to figure out.
As in - which bit gets to benefit from the lower tax bands in which order!
Very clear explanation. I would like to ask where to find the exchange rate for say, GBP to USD or HKD or other currency that is say, 10 or more years ago? Did HMRC have a list of exchange rate for us to use? It is sometimes difficult to find exchange rate to the exact date of buying the shares. Is this principle also apply to regular investment, let's say a fixed amount for each month by selling partially, then continue the monthly regular investment?
That bit is a bit of a grey area and there is no official list. I use xe.com - pretty handy.
@@SashaYanshin Thanks a lot, do you need to keep screenshot record of the exchange rate so that if HMRC are questioning which exchange rate you used in your calculation of capital gain?
@@matthewchiang9506 I just know that if I always use the same source like xe, then I can always show how/where it came from
@@SashaYanshin Noted and thank you for pointing out the importance of consistency.
@@matthewchiang9506 The broker should include this in the CSV export, like with trading212
an excel sheet does sound like the best/easiest option...
here's a thought/question, though... do you actually need to keep a record of all transactions in that sheet?
it sounds like for each stock/company you're invested in, you just need to keep track of the average buying price, number of shares and any broker fees... and you just update that every time you buy more of that stock/company... does that sound right?
another question: what do you do with fees on transferring money to the platform (since these fees aren't tied to any one stock... and kind tie to all subsequent transactions)?
Not really for certain people. What about the day trader who trade thousands in a year making having gain and loss in more than 100 different stocks using money? I doubt anyone will be able to trace it. I also doubt any trader will ever do that. The amount of time that you need to spend comparing to the gain you have made does not make it worthy.
@@adiadindas Not really to which bit exactly?
Whether you need to keep a record of all transactions? Or whether it's enough to just keep track of the average buying price, number of shares and broker fees? (a "yes" to one is probably a "no" to the other)
but also, if a day trader does 10,000 trades in a year... that's just 40 per day. If you have a working sheet/tool, then adding those in would only take minutes at the end of your trading day, wouldn't it? (i'm no day trader, though, so this is just my speculation).
The guidance is that details of the actual transactions have to be kept in case the HMRC disagrees with you etc.
Professional day traders will have systems/processes in place that are going to be better than Excel and with respect to indirect fees - that is a very good question. And one that I think you'll have different accountants interpreting differently as to how/if you can apportion those :)
@@SashaYanshin thanks for the reply :)
Will cgt tax apply if.L I sell a stock in a non Isa account and than buy them back the same day in an Isa account. Or do i have to wait 30 days?
Nice thanks
Thank you Kevin :))
What about fX charges for do you include them ?
With my broker they issue an annualised statement of my account. Can i use this to pay my tax at the end of the year if it is above £12300?
Many thanks for the video btw
hi do i only pay CGT when i sell the crypto and or stocks? what if i am holding it do i still declare it?
I thought you were going to end on the punchline that a ISA fixes all these problems!
I probably should have but the video was already getting a bit long! :))
Hi, I am new to trading. So any gains I pull out of my trading212 ISA I do not need to worry about all of this?
@@franklewis1546 Correct! No capital gains due and you don't need to calculate or report it if it's inside an ISA
@@SashaYanshin thank you very much. Keep up the good work.
Hi Sasha, if you buy on Year1 and sell on Year 4 and lets say total gains of 30 K, Now since 12300 per annum is tax allowance so that makes my allowance to 12300 X 4 so i should not be paying any capital gain tax right ? Also, does it mean that if i buy the same mutual fund again after 30 days it will force HMRC to calculate 12300 allowance every year ? Effectively i just need to take 1 month holidays on my investment in the same mutual fund. Thank you
Nope - the gains are not spread over years during which you haven't used it. So if you hold for 4 years without selling, then sell after, you still only get 1x £12,300 allowance for that year.
When do you find out if Etoro withold the full 30% dividend tax on US stocks or just the 15%? Surely they made you fill out a w8ben form?
They did but I went and bought a share that should pay a dividend - expect to know the result in the next 3 weeks.
Hi Sasha, how would it work in the case of stocks and shares ISA? You have 20000 allowance for a year and let’s say buy some shares for 10000. These shares raise in value to 20000. Let’s say you sell them for 20000 and keep the money in the same investment account without cashing out. This all happens in the same tax year. Can you then use that 20000 to buy the same of different shares couple of months down the line without affecting your allowance for that same tax year? Can you put additional 10000 into your account the same tax year and buy more shares? I guess the question comes down to this: if you put 20000 can you buy and sell shares multiple times for profit even if the value of shares goes over 20000 because of your profitable trades? I hope it makes sense.
Yep Mario - the allowance is for deposits only. If you deposit £10k and it becomes £100k. You can STILL deposit another £10k in the same financial year. You can then sell and buy different stocks, etc within the ISA as much as you want for as long as you want - even if you open a different ISA for the next financial year elsewhere because the limit is on depositing only. 👍
@@SashaYanshin thank you for such a quick replay
that is crazy .....how hmc know how much have actualy made in profit ?
You have to tell them! (And they are getting more and more apps to send them data too)
Ha now im intresting what hapen if i dont pay gains tax i just ignore this what gov gona do contact me i have to pay it or 2 3 years later they gona contact me or they dont see me gains in stock market ??? how its work if i ignore tham ???????
?
So your question is... what happens if I ignore the law and don't pay my taxes? That's an interesting question that I definitely am not the right guy to answer but I most certainly will never recommend taking that approach.
yeah but why i have to calculate me tax maybe they will inform me no ?
Can someone just clarify....I earn employed 30k a year.
If I withdraw 12k of share profit every year, I don't pay cgt.
Could you do an update on what trading apps to use for a young investor wanting to invest around £1000 as trading 212 is now being funny, also want to get into some crypto. Cheers 👍
I have done a fair few videos recently on the topic - best Stocks & Shares ISAs, cheapest investing apps, etc. Think those cover it pretty comprehensively - check them out!
The reality is that if you hold less than 120k one would be fine as long as bed and breakfast is applied every year. It's a bit of a chore but doable
The market does vary though - I presume you are talking about skimming the % return off the top every year on average.
But then there's inflation and what if you need to draw down the whole lot or a larger chunk in one go - a few things to think about.
Having said that I generally do agree that people underestimate the effectiveness of the £12,300 tax-free CGT allowance.
@@SashaYanshin Indeed, and I hear everyone here saying ISA ISA, the reality is that this is useful if you have already maxed out your ISA and don't want to put the money on a SIPP which will not be accessible in later stages of your life. With the bed and breakfast you can basically milk the % return up until 12k a year which if you consider a normal year to be between 6-10% is quite common. I do agree that it is best to do it all in one lump sum investment otherwise it's hard to work out
wait a minute? Does you ISA account earnings count? The app says you do not pay tax on the money ISA earns???
Nope. ISA is exempt from capital gains.
Trading212 has a Realised Profit figure. Can you not use that for your self assessment? It should already include all those calculations for net profit
Not really no - that figure will not accurately calculate your average buy price for the disposal calculations and it adjusts over time as you exit positions and reuse the money to enter new ones rather than keep a continuous tally.
It is all clear but I am a bit confused when actually you realize your profit. Let's say you have an account at an online broker and once you sell the stock you end up with some profit. Is it realised and I am required to report it for a capital gains tax when I transfer the profit to my actual bank account? If I buy another stock straight away with that small profit without taking it out from the broker account, do I still need to report is as a capital gains? Thanks.
The point of realisation is when you sell. Even if you immediately go and buying something else that doesn't matter. Each disposal has to calculate what the gains on it were and every sell of shares is a disposal.
Of course - there's all the extra rules about bed and breakfasting too...
@@SashaYanshin Thanks I got it. What I wanted to learn is if I still need to report a capital gains if I keep the profit in the brokers account and not transfer anything to my bank account?
@@lutfigorkemturan159 Yep.
@@SashaYanshin Hi, I buy and sell shares very frequently on etoro and I have realised a profit of around £1100, do I have to report this to HMRC? I mean it's way below the CGT allowance, do I have to do the self-assessment?
Hmm, ok so let's see, if you for some odd reason quadruple your investment somehow, say from 10.000 to 40.000, in order to avoid paying tax on that gain in your ISA, you could partly sell your shares in different years?? like sell 10.000 worth each tax year after that? (what if you move those gains instead of withdrawing them into dividend non-volatile stocks?)
Remember that there is no Capital Gains tax to pay inside an ISA at all... :)
How does it work with free shares, as an example I got a free share worth £5 with freetrade. I cashed out on it, so I made £5 without spending money. How does this effect capital gains tax?
Technically it works like this:
1. You get a free share - check the report on the free share for the exact price at which you got it. That will be treated as Income and subject to the relevant income taxes, etc.
2. You then disposed of the share at a point in time after receiving it. The gain between when you received it and sold it is the Capital Gains bit :)
But then again that's just my opinion so do your own research! 😂
@@SashaYanshin ok thanks. It was only a £5 share anyway. But I ended up selling it for a loss. So a loss shouldn't effect it right?
@@littledanmcnamara1840 Well on the Capital Gains it'll be offset against any other capital gains when you calc it (if you have any) OR you'll be able to carry it forward for 4 years.
However, technically, the free share itself is income and you'd be subject to tax on that but that's one for you to figure :))
@@SashaYanshin thanks alot for the info, I'll also do some research
@@SashaYanshin is a free share income as soon as you get it or once you sell it?
If I buy share options through a company sharesave and at maturity I have, say, 20k profits, can I whack it all in an isa within 90 days and then immediately sell and avoid all tax?
Nope. If you didn’t buy through the ISA, you can’t just move assets in.
@@SashaYanshin ah ok thanks man I need to look up ‘bed and isa’ as I think I missed the meaning
@@jakeah1175 Bed and ISA is a weird term because it doesn't really mean much. If you're selling for gains over the threshold, it doesn't do anything to help.
@@SashaYanshin that’s really helpful Sasha appreciate you taking the time to answer my questions! Best
Or just get an isa and not have to worry about any of this lol
Yep - very good point and I probably should have made more of it in the video but was just focused on the question in hand! :)
How much cost isa account yearly?
This is why only trade in an ISA, if you use a GIA then basically don't trade the shares, its not worth it!
All right I stopped watching this after 6 minutes
Iam back to your easier videos
Damn it. Ruining my retention stats! 😂
@@SashaYanshin don't blame it on me , I don't have a masters In math
Great video, thanks. Very informative. I am never selling any shares ever. I'll just buy n take them to my grave.
Hahaha. Whoever inherits your estate is going to be forever grateful for the months of work they'll have to do to calc all of your gains! 😂
@@SashaYanshin 🤣🤣 that way I can piss people off from beyond the grave. Want my estate ??? (Which won't be much btw), then deal with this + add inheritance tax to the mix 🤣🤣
@@navd1488 Put it all into Bitcoin and tattoo the private key on different parts of your body. That'll make for one lively open casket funeral...
@@SashaYanshin nows that's hardcore, finally some actual good use for bitcoin 🤣
Can we deduct spread fees from the tax owed?
Spread is not a charge on regular investing accounts - natural market spread therefore can’t be deducted.
i have both isa and non-isa investment account. how can i calculate tax please?
You do not need to calculate anything for the ISA - no Capital Gains Tax applies. For the regular investing account the way I describe in the video is the way to do it.
@@SashaYanshin thank you very much
my gain is very low. do i have to fill-up self assessment form?
@@hbhell If your gain is low and you don't have to fill it out for other reasons (e.g. you are already registered), then no - you don't have to fill it out.
@@SashaYanshin thanks. you are the best.
You said you've not found good software so use an Excel spreadsheet. Any chance of sharing that spreadsheet template please? I've made my own, but there are things it doesn't handle well (e.g. selling, splits).
Was thinking of making a version that is a bit nicer looking - the difficulty is that if that version doesn't quite work the right way or makes an incorrect assumption/doesn't account for some specific situation, I could get into all kinds of sticky situations with people getting an incorrect answer out of it - Gonna have a think on this one.
Do u HAVE to use avg buy price when disposing of a share? So e.g. if u bought 10 of share A at 100 amd 200 and then sell 15 of share A at 300. Can u claim u made profit of 2000 {10(300-200) + 5(300-100)} with 5 of share A leftover (bought at 100)? Or do u HAVE to claim it was bought 20 of share A at the avg of 150, where profit would be 2250 {15(300-150)} with 5 of share A leftover (bought at 150 avg)?
Technically since the rules changed some time ago (2008?) you do have to use average buy prices...
@@SashaYanshin ahh that sucks. Said on gov website that pooling "allows" you to use avg price of all shares bought (ie thought was optional). Ty for reply!
@@alaboulangerie There’s a big difference between a series of trades on the same day and long-term here which is maybe where you’re seeing the difference.
Paying tax is bad enough. But working it out? Jeeez
That alone makes me use an ISA
A very good reason to use ISAs for sure!
I would use TaxScouts
Not used them but isn't it just an outsourced tax accountant service? I have a feeling that for that fixed fee they won't be going through thousands of transactions manually and match them, etc. I would guess the bulk of that work will be on you regardless.
Why can't we just use the purchase price of all the individual buys? I use eToro and I can see all the different times and prices I've bought at and it is very simple to track it when I close the trade. The average method completely messes it up.
because that’s how the law says you have to calculate it. This is on regular shares by the way, not on CFD positions.
@@SashaYanshin Hi Sasha, can you expand how this varies for CFD trades? Thank you
Hey
Is skrill is good? And If I did withdraw from trading 212 to skrill and after that I want to send my money from skrill to revolut account I mean can I do that ?
I don't know - I don't use them and generally avoid using accounts that try to mimic bank accounts but operate under an e-money licence because I do not like the setup, protections and risks associated but each to their own :)
Surely, it's easier to incorporate stamp duty and transaction fees into the book price per share for each transaction entry into your spreadsheet? So, your cumulative book price is total cost and you don't need to recalculate fees and taxes each time you have to enter a sell transaction.
It depends - some are proportionate in which case yes - it does make sense. But ones which are not proportionate (eg fixed transaction fee) won’t work if you do it that way although I guess you could just notify everything on a per share basis.
@@SashaYanshin Interesting, I just divide my total transaction cost by number of shares to get my book price per share, and then the cumulative total purchase cost divided by the total number of shares purchased is calculated automatically in the spreadsheet. This means that my fixed fee is divided by however many shares I purchase in each transaction.
@@AnjleeBhatt Good! Was pointing out that if you have different platforms where the fees work differently, you'll be doing it in different ways but it's definitely a good way based on what I understand from your post.
The point of the video is to explain the principle of how you'd do the actual calculation - the specifics of how are a whole other topic :)
so the moral of this video - dont do multiple tranactions with the same share
This will mean you could not become a trader ?? Well some people are traders.
@@adiadindas I think you misunderstood my point. My point is if you buy share in one company - buy a single large investment rather than many smaller ones beause it will get more complicated when calculating your taxes
That or just get into good habits with recording transactions and doing the calcs :)
Save yourself the hassle and use a S&S ISA.
Or if you're fortunate enough to be able to invest more than £20k a year, then you should be able to afford a tax accountant 🙂
My head it hurting 😩
Apologies Mark! I tried hard to make it as simple as I could! 😂
Hi Sasha, great video, thanks! One thing confused me: It seems for the calculation of the capital gains at time stamp 7:12 you simply deduct the average buy price (£86.25) from the sell price. That average buy price does not seem to take into account the prior sale of 10 shares @ £100. However, when looking at the official example from HMRC under the following link, they instead use a "pool of cost" approach which does take into account prior sales as well, not only the average buy price. Was wondering which of the two is correct? Thanks again. assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/972646/HS284_Example_3_2021.pdf
It does take it into account - look at the numbers closely. You first bought 10 shares at £60 and another 30 shares at £80. Average buy price of those shares: £75.
You then sold 10 of those shares, so you are left with 30 shares total at an average of £75 (was 40 shares before the first sell).
So in the final calculation you have those original 30 * £75 + the shares you bought after to work out the new average price. 👍
@@SashaYanshin Understood it now, you're right. Thanks Sasha!