Do you pay tax on CFD trading?

Capital Gains Tax (CGT) is a type of tax that individuals may be required to pay on certain financial transactions. This tax applies specifically to profits made from the sale of assets, such as property or investments.

The process of filing a Self Assessment tax return can be complex, particularly for those who are unfamiliar with the tax system. It is important to ensure that all relevant information is included and that the return is submitted accurately and on time.

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In the context of Contracts for Difference (CFDs), CGT becomes relevant when an individual realizes a capital gain on their investment. A capital gain occurs when the value of an asset increases and is then sold for a profit.

The CGT allowance is a threshold that determines whether an individual needs to pay tax on their capital gains. If the total amount of capital gains made in a tax year exceeds this allowance, then the excess is subject to CGT.