what's the best way to pay the least amount of tax on share profits?

Question

i trade the stock market on a daily basis and i'm making on average about £6000 per month. i am retired and this is the only income my wife and i have.
whats the best way to pay tax, should i set up as a business?

Answer 1

Congratulation! 6000 per month from doing the thing you like. You're the envy of most people! I understand if you want to keep as much as you want.



Depending on the country you live in, you can get tax discount on your share gain if you hold it for more than 12 months. Since, however, you're a trader, I assume you hold your share for less than 12 months.



Another way to minimize your tax is, as you rightly pointed out, to set up a business (or to trade as a sole trader). The tax rate for businesses is likely to be lower than the highest marginal rate for individual.



Whether to set up a business or not is simply an arithmetic question. Take your income. See where you are in terms of marginal tax rate. If your marginal tax rate is higher than the tax rate for business, the answer is obvious.



Happy investing!

Answer 2

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Answer 3

I was trading on the stock market and I am now buying shares with a company called www.ftsie.com who offer an offshore nominee service (you need to contact them for this) and I am earning over 20% a year on my money without any work. It is infact a property stock market, so it is a very safe investment. Take a look at the sight and good luck to you and your wife.

Answer 4

well the money you make on buying and selling stocks comes under Capital Gains laws.



this means that the share sales are recorded on the Capital Gains pages of a Self Assessment Tax Return. any dividends from that you may get from and shares held for a period of time are also recorded on the form in a diff section along with any other sources of income such as a pension and bank interest received.



if you want to go legit, then you need to contact the Inland Revenue to request a Tax Return form, you will need you National Insurance number for them to set up an account for you.



go to www.hmrc.gov.uk for contact details.



now for abit of tax knowledge......



Capital Gains Tax (CGT) is payable on the gain made, less your annual allowances which is currently £9200 per tax year, per person (6th April to 5th April)



so for example, if you bought shares for £10000 and sold them for £12000 the gain is £2000 and is under the £9200 allowance, so no tax is payable.



if the gain was say....£10000, then you would only pay tax on £800 as 10000-9200=800.



now each person has an allowances, so potentially, you have £18400 worth of allowances between you and your wife. if you buy the shares in joint names, this would lower the tax due as you would have to make over £18400 in gain in order to pay tax.



when you say making £6000 a month. is that the gain amount? or what you receive from selling the shares?



if its the gain then you could be in for nasty tax bill, if its proceeds, then you need to calc gain by taking the cost of the shares away from the proceeds you receive.



obviously there is abit more to CGT if you own the shares for a number of years, such as taper relief and indexation if owned them before 1998, which would need an accountant to work them out for you.



another bit of advice, is to try and limit the shares you sell in any one tax year to either avoid paying cgt or to keep below the 40% tax band, so if you need extra cash, try to sell on 5th april, then on the 6th april as this is the finish and start of each tax year.



best bet would be to visit a local firm of accountants and they will take care of all of this for a fee. depending on how many transactions you have depends on how much it will costs.they should offer you a free no obligation consultation so see what you are doing and explain everything you need to know, then tell you how much it will cost to do you tax return form.

Answer 5

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