How to Calculate Tax on Money Made from Shares

by Vidit Agarwal Marketing Director

There are various types of taxes in UK. In the month of April every year you have to go through filing federal individual income taxes, on our own or with the help of an experienced tax accountant.

Taxes on Stocks and shares

Stocks or shares are a term of investing money in the stock market, rather than saving in your bank account. You can hold your money into stocks or shares of any reputed stock exchange company listed in the UK. Many people make capital gains from stock investments. An individual who has sold shares or mutual fund units in the previous financial year must mention the gains, if any, in the return.

Many companies share their profits with their shareholders in the form of dividend that’s why you normally made the profits of share in a year. Mainly there are three types of taxes you have to pay in UK when you are trading in shares, stamp duty, capital gains tax and income tax.

Capital gain tax on stock and shares:

Capital Gains Tax can get a slightly complicated, but this could be possible to avoid with a little planning. It is paid when you make profits from your shares. Any short term capital losses from your shares can be deducted from the profits to reduce the amount of short term or long term capital gains tax you have to pay. Whenever you sell your stocks or shares, you need to calculate the position of your shares and any type of losses or gain made in the particular tax year will be calculated to your net worth. What you have to pay on Capital Gains Tax (CGT):

  • Investments held outside a tax wrapper such as an ISA
  • Valuable personal possessions
  • If you have overseas property
  • If you inherit Property
  • Businesses
  • If you have Property in the UK that is not your main home

Income tax on dividends:

The other type of tax you pay on sale of any capital gain, income tax, is only due if you receive money from stock dividends.

Stamp Duty:

The stamp duty is payable when you purchase more shares and funds. You no need to be worry about stamp duty because this is calculated by your broker when entering to trade.

Taxation on stock can be complicated and the rules may vary from year to year. If you are in any doubt about your Capital Gain Tax (CGT), you may wish to book a consultation with financial adviser. For more information you can read this guide about taxes on stocks and shares in UK.

At the meantime, do you really know your different tax types? It’s always helpful for you to know the different tax system in the UK so you will be aware where your earned money is going on. For your knowledge you can explore these blog on different taxes in the UK. You will find very useful information on it and what is it? Taxes on Bonds, Taxes on Commission and Taxes on Day Trading.

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About Vidit Agarwal Committed   Marketing Director

363 connections, 14 recommendations, 1,640 honor points.
Joined APSense since, August 31st, 2017, From Harrow, United Kingdom.

Created on Mar 28th 2018 03:15. Viewed 1,295 times.


Irfan Haider Freshman  Irfn Haider
Nice Information about how to calculate Tax on income from Shares. I really liked your content.
Apr 17th 2018 10:23   
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