Taxes on day trading

Hi guys,

I work a full time job paying paye, prsi and usc etc and have been dabbling in day trading (although not with real capital yet) I understand the capital gains tax of 33% on profits must be payed but my question is, after the cgt tax is taken am I subject to pay paye, prsi and usc on the remainder of the profits??

(Also before people jump to point out the risks of day trading I'm just trying to understand the situation if it arises)

Cheers

CGT won't apply as you are trading.

So you won't be able to set your trading losses against gains from other sources.

I think you can only set trading losses against income of a similar nature. So for example, if you were to lose €10,000 this year and make a trading profit next year, unlikely as that is, you could bring the loss forward.

I don't think you can set your losses against your income for PAYE purposes.

Brendan

It is worth considering whether spreadbetting would be a better way to go here, it is untaxed provided it does not reach the level of carrying on a trade. The risk exposure when you're just dabbling is little different to buying/selling actual shares. Even if you get into 'real money' territory there are plenty of providers out there to divide your risk across if that is a concern.

Brendan Burgess said:

CGT won't apply as you are trading.

So you won't be able to set your trading losses against gains from other sources.

I think you can only set trading losses against income of a similar nature. So for example, if you were to lose €10,000 this year and make a trading profit next year, unlikely as that is, you could bring the loss forward.

I don't think you can set your losses against your income for PAYE purposes.

Brendan

Click to expand...

Losses from a trade (assuming the OP does meet the badges of trade) can be set off against other income in the same year, under S.381 TCA.

This treatment has to be claimed / elected, by default the losses carry forward to be set against future profits arising from the same trade.

Torble

That is great. Thanks for clarifying.

How long does he have to elect to claim the losses? 4 years?

Brendan

Brendan Burgess said:

Torble

That is great. Thanks for clarifying.

How long does he have to elect to claim the losses? 4 years?

Brendan

Click to expand...

Actually no, and thanks for asking because I hadn't thought of it; for Section 381 loss relief the time limit is two years from the end of the relevant year of assessment . So for 2020, a claim would need to be made by 31/12/2022.