Self Assessment if only income is through investments

Hi, I have a question around employment status. I left my job a couple years ago as I invested on the side and the income/return this has provided grew to a point where I can live off it full time. My day to day mainly consists of monitoring the markets and managing my investments accordingly. Does this make me self-employed? So I would need a business tax account? I have always filed my previous returns under a personal tax account while I was employed and my investment income was just in addition to that under the additional income sources section/capital gains etc, however now my investment income is my only income. Would just like to know how I should go about this. Many thanks

Hi,

You would need to ascertain if you are trading or not.

You can find guidance here:

CG56004 - Futures: income or CG: CG treatment

Thank you.

Hi, I am not trading. I do not use a trading platform and do not buy derivatives, CFD's etc with any leverage. I buy just stocks and hold 6-24 months or so then sell them. This produces a capital gain and I use this to cover my living expenses.

Hi,

Individuals who buy and sell shares and, or securities with their own money are not generally considered by HMRC to be trading. You can see guidance here:

BIM20200 - Meaning of trade: badges of trade: contents

The following guidance to relevant tax cases and says that shares which are dealt with speculatively or as investments are dealt with under the capital gains rules.

BIM56840 - Financial traders - instruments and shares: the badges of trade

BIM56870 - Financial traders - instruments and shares: case law and companies

Thank you.

Thank you for clarifying, but this still does not answer my question. Is this classified as "self employed" so do I require a business tax account? Or will a personal account do... Thanks again

Hi Dave,

This is a decision you need to make.  HMRC cannot make it for you.

 You need to decide for yourself, if you are dabbling in stocks etc now and again or are doing so on almost a daily basis or more and treating your investments as a source of income.  

If you feel you are in the latter, then you could be considered as self-employed.

 In either case, a busines tax account is not required by HMRC, however your banking provider may prefer that you have one.

Thank you.