I've had a 7 year break from trading, and would like to get back in. Previously, I was doing it via a US online discount broker. This time, I'd like to try a British online broker, which probably mean's I'll be taxed at source on my profits. Is there a way to avoid such taxation, such as doing it within an ISA? If so, can anyone suggest an ISA that allows easy and unlimited trading, up to one's untaxed level? That's about £3000, per annum, is it? Thanks for any help.
The UK policy on taxation attempts to achieve a situation where your total tax liability does not depend on where the trading was actually implemented. They often allow you to offset taxes paid to other governments against UK tax, but you must still declare those overseas trades.
Capital taxes are not applied at source. Technically, dividends are not
taxed at source, however you are allowed to offset an amount which, notionally at least, represents corporation tax already paid, against the tax due on them.
The ISA limit is on the amount of money entering the ISA each year, not on the tax liability or internal trading volume, and is more than two and a half times your figure.
You are also allowed a similar amount in net gains, outside of ISAs, as far as capital taxes are concerned (but as noted, above, that applies to
capital gains outside of the UK, as well). The big problem with day trading is likely to be the size of the tax return you need to make, as a high trading volume may trigger a need for one, even if the net profit
doesn't.
However, what does concern me a bit is that you are talking of day trading at a time when day trading is, in part, being blamed for current
problems, and that you may have previously failed to pay proper UK taxes
(although you might just be outside the statutes of limitation).
BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here.
All logos and trade names are the property of their respective owners.