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I wasn't employed during the previous tax year and speculated in multiple financial markets on my own (ie no company was created):
- using an US broker to do hundreds of trades of financial derivatives (options), and also an handful (less that 10) stocks trades. The overall net profit/loss was a handful thousand pounds.
- using an EU broker to trade cryptocurrencies. An handful of trades with an overall net profit/loss under a thousand pounds.
- using UK account to trade forex. An handful of trades with an overall net profit/loss under a thousand pounds.
The duration of these trades varied between minutes to weeks.
I've googled to no end but haven't found a clear answer.
Does the HMRC sees this as gambling or trading?
Does it make a difference if the outcome was a profit or a loss?
If it's gambling then am I correct that I only need to write a cover letter stating that together with the net profit/loss result?
But if it's trading then should I fill these:
- SA108 (capital gains) for the EU and UK trades?
- but the US trades should it be SA106 (foreign income or gains)? Or should it be SA103 (self employment)?
Thank you very much.
Apologies but I'm still confused about a few things.
1) When you say "shares" does that include both shares and financial derivatives?
2) Does trading any amount of shares _or_ financial derivatives, automatically makes one become self-employed? Irrespectively of the fiscal year result being a loss, and independently of the total amount traded?
3) According to the link you provided https://www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return it says
> "self-employed as a ‘sole trader’ and earned more than £1,000 (before taking off anything you can claim tax relief on)"
> "But you may need to send one if you have any other untaxed income, such as: [...] income from savings, investments and dividends"
At the end of the fiscal year my balance was negative, both for traded shares and for traded financial derivatives. So does that mean I don't have to do self assessment?
Or does the term "income" refers to the existence of any singular profitable trade? Independently of the final overall result of the fiscal year, in which losses are accounted for. And by implication I have to do self assessment.
4) On the survey at https://www.gov.uk/check-if-you-need-tax-return it asks
> "Did you earn more than £1,000 from working for yourself? This is the amount you earned, including any coronavirus (COVID-19) support payments you received, before taking off any expenses."
Similar to my question above. Is this value for the whole year while considering losses as well? Or is it just considering gains?
And the other question is not clear either:
> "9. Do you need to pay any Capital Gains Tax? You **usually** have to pay ..."
What exactly does "usually" mean? How does a yearly negative balance or (even though it doesn't apply to me since I end up negative) the Personal Tax Allowance of £12300 fit here?
5) Regarding foreign losses, you posted a link to remittance basis. I'm confused, shouldn't those still be on arising basis?
Once again, thank you very much for the help.
During the fiscal year of 2020-2021 I was unemployed and speculated in the stock market.
I used a broker in the USA to do hundreds of trades. The huge majority involved trading financial derivatives. With the very odd exception where I traded stocks and I virtually broke even on those. Some trades lasted weeks while others lasted minutes.
After doing the math for the whole fiscal year, in which I converted each transaction from USD to GBP using that day's rate, I ended up negative by a couple of thousand pounds.
In addition to the above I also bought and sold some crypto currencies in an European exchange for a total profit of about two hundred pounds.
During this period I never received any benefits of any kind.
Additionally - as I don't know if it changes things - from the Tax Service Gov page I can see it's possible to make voluntary contributions to my pension. And I can do this until 2027. Which is something I'm thinking on doing.
My question is: do I need to self-assess?
If so then which way should I do it?
I never created nor registered any business nor have an UTR, so I guess that rules out option "self-employed or a sole trader". That would imply going with the option "not self-employed" then. Is that correct?
If I'm not obligated to do a self-assessment and that is only optional then: are there any advantages or disadvantages in doing so?
My understanding is that it would allow me to carry losses to following years.
Thank you very much for your help.