Online stocks & coin trading and UK tax
I want to give you a bit of a health warning about online trading and UK tax issues.
I’ve seen a massive increase in people playing on online platforms for bits of spare money they might have. Be it Bitcoin, Chip, Coinbase, Trading 212, interactive investors, eToro and various other platforms like it, including playing on platforms within the EU.
The problem you’ve got is that these platforms may not keep adequate records in order for you to complete your UK tax return. A lot of people think, “Well, it’s EU trading. I don’t need to worry” or “I’ve not made much or any profit, so I don’t have anything to declare”. Unfortunately, yes, you do.
You need to make sure that whatever platform you can use, they can provide an end of year consolidated tax statement for the UK. It has to be in the year 6th of April to the following 5th of April, not a European year. Some of the platforms do provide this, but not all.
The statement should include dividends paid to you, any interest paid, but more specifically, the capital gain & loss per sale and a summary for the year.
If this is not provided, you will have to keep very detailed records of when you buy an investment as to when you sell it, and if you partially sell it, how much of the individual investment did you sell?
You may only make a small profit or maybe a loss, but you need to tick the box that you had capital gains. If you sold over £49,200 worth of stocks and shares in the tax year, even if the initial investment you have played with is a small amount that you have just reinvested lots of times, you must report it on your UK tax return and detail out the sales proceeds, purchase costs, losses and gains, plus attached back up to the calculation. You might’ve produced a loss which you can carry forward. You might’ve produced a profit and it could be covered by the capital gains tax threshold, so you may not think it’s important. It is important and must be declared even if no tax to pay.
One thing that’s been picked up very recently is HMRC get reports from UK and European trading platforms, and it will show if people in the UK have been dabbling on these markets and what income they have received. The problem being is HMRC only get to know the income. So if you’ve sold some investments, they just know how much you sold it for. They don’t get the information about how much it was purchased for. Therefore, it looks like you could have had an income of, let’s say, £100,000, but they don’t know you actually spent £95,000 to get that income. They just know the income and they will open an investigation if you end up on the naughty person list. it’s up to you to collect these records to prove that you don’t have that £100,000 stashed away.
If you received any dividends from European trading platforms, then foreign dividends need to be declared either in the foreign box on UK dividends page if less than £2000, or in the foreign section of the tax return.
It may take a couple of years for those reports to come through, but they will be followed up with.
This is just a heads-up. Some of these online platforms are pretty useless at keeping the information. So unfortunately, it is down to you to keep detailed records of what you’ve purchased, what you’ve sold, when you sold it, did you get any other income for those returns.