Tax on shares?
 

Hi

A real basic question that I need answering -thanks

I am thinking of online share dealing.

Can someone let me know if

1. I have to pay tax on the profit of shares I own and if so will I
2. therefore will need to fill in a tax return or
3. is tax taken off when you sell through your online broker (e.g Barclays)

I cant seem to find a simple idot proof answer to this

Thanks
Steve

My understanding as a non-financial professional is:

You pay stamp duty when you buy them.

You pay income tax on the dividend income at your marginal rate. I think some of the dividend might be taxed before you see it, but I'm not sure.

The (hopeful) growth in the share value is a capital gain. You can use up your annual capital gains tax allowance and repurchase the shares after a month. Bedding and spousing can be used, bed and breakfasting is no longer possible because of the one month period. If you hold the share over a long period you may be able to get taper relief at the time you sell them and not be charged the full whack of CGT you'd otherwise expect.

It is your responsibility to tell HMRC about any gains you make.

If you haven't used up ISA allowances for yourself and spouse it would most likely make more sense to do that first since you are shelted from stamp duty, tax on dividends and capital gains, and you don't need to complete a tax return.

you pay capital gains tax - current exemption is about 8.5K then the rest is taxable income added to your salary then tax is paid at the applicable rate that you pay

you could also use spread betting if you are not so worried about dividends - thats tax free

This is what happens when you have a chancellor with short arms and a deep sporran.

Cheers
Kav

Thanks alot for that chaps
All clear now on that.
Have been tracking shares now on spread sheets for about a year. And I recon it will be a little while yet before I take the plunge.
Steve :)