18 year old trading on line - tax Q

[Square Leg]

My 18 year old lad (full time student final year A levels) has started dabbling in on-line trading.
He started in January with £700 and has so far doubled his money in 4 weeks - he takes out profit and puts it in his Chip account to get some interest.

At what point does he have to tell HMRC or declare earnings?
(He also has a part time job at a golf course)

[98elise]

Do it inside an ISA its tax free and no need to report it to HMRC

In a GIA (non ISA investment account) it's subject to capital gains, and the annual tax free limit is 6k.

Edited to add...
What is he investing in that's doubled his money in such a short space of time? It sounds high risk with those returns.

Edited by 98elise on Wednesday 28th February 20:28

[Square Leg]

98elise said:

Do it inside an ISA and there is zero tax

Edited to add...
What is he investing in that's doubled his money in such a short space of time? It sounds high risk with those returns.

Edited by 98elise on Wednesday 28th February 20:22

He’s got an ISA already set up.

It seems to be Forex trading - today he made £400 with gold against the US$.
He has something that he pays £20 for a 3 month membership (PU prime?) that shows lots of people’s trades and past performance and he can then follow their trading.

I can’t pretend to understand it if I’m honest.

[98elise]

Square Leg said:

98elise said:

Do it inside an ISA and there is zero tax

Edited to add...
What is he investing in that's doubled his money in such a short space of time? It sounds high risk with those returns.

Edited by 98elise on Wednesday 28th February 20:22

He’s got an ISA already set up.

It seems to be Forex trading - today he made £400 with gold against the US$.
He has something that he pays £20 for a 3 month membership (PU prime?) that shows lots of people’s trades and past performance and he can then follow their trading.

I can’t pretend to understand it if I’m honest.

I don't do Forex so can't comment on the risk, or if it can go in an ISA. I stick with Funds and Stocks.

[Square Leg]

98elise said:

I don't do Forex so can't comment on the risk, or if it can go in an ISA. I stick with Funds and Stocks.

I haven’t a clue either.
As for the risk, he knows it’s high and at this stage of his life with no real commitments I don’t think it’s an issue (he knows how to manage money and knows what could happen..)

Thanks for your suggestions.

[LooneyTunes]

Square Leg said:

He’s got an ISA already set up.

It seems to be Forex trading - today he made £400 with gold against the US$.
He has something that he pays £20 for a 3 month membership (PU prime?) that shows lots of people’s trades and past performance and he can then follow their trading.

I can’t pretend to understand it if I’m honest.

There are various threads on here about FX trading and margin trading. Make sure he understands the risks (which are not insignificant).

If it were easy money, everyone would be doing it…

[Square Leg]

LooneyTunes said:

There are various threads on here about FX trading and margin trading. Make sure he understands the risks (which are not insignificant).

If it were easy money, everyone would be doing it…

He started with £700 and knows that’s all he’s having to invest in this particular foray into trading.
Whatever he gets from it is a bonus and he reinvests it into Chip that pays 4.8% interest.

I’m happy for him to take the risk - it’s a good learning curve, and also works well with his business A level.

[Tim Cognito]

If I've got it right then it's when you hear him mention puts or calls you should be worried?

[bmwmike]

Yeah just make sure the only liability is 100% of what he's got to hand and not some leveraged thing/whatsit

[Square Leg]

Tim Cognito said:

If I've got it right then it's when you hear him mention puts or calls you should be worried?

He mentions putts a fair bit - he’s a very good golfer aiming to do his PGA next year

[Square Leg]

bmwmike said:

Yeah just make sure the only liability is 100% of what he's got to hand and not some leveraged thing/whatsit

He keeps the £700 as funds and takes anything made over that out straight away.
Not sure what he could leverage with though?

[okgo]

Square Leg said:

He started with £700 and knows that’s all he’s having to invest in this particular foray into trading.
Whatever he gets from it is a bonus and he reinvests it into Chip that pays 4.8% interest.

I’m happy for him to take the risk - it’s a good learning curve, and also works well with his business A level.

It isn't investing, its gambling, which so far he's been lucky to be on the right side of.

It is likely he's been suckered in by someone on instagram pushing their trading academy dicking about in a rented lambo or similar flogging 'signals' on the basis of "you too could live like this working from the beach for just £30 a month". It is remarkably common, and like any other pyramid scheme, preys on the people who don't know any better, similar to a scratch card type audience in the main I'd have thought.

I'd be very wary of it personally.

[Square Leg]

okgo said:

It isn't investing, its gambling, which so far he's been lucky to be on the right side of.

It is likely he's been suckered in by someone on instagram pushing their trading academy dicking about in a rented lambo or similar flogging 'signals' on the basis of "you too could live like this working from the beach for just £30 a month". It is remarkably common, and like any other pyramid scheme, preys on the people who don't know any better, similar to a scratch card type audience in the main I'd have thought.

I'd be very wary of it personally.

Ah right - he did mention some on-line seminars.
He’s insistent that he won’t go over his £700 imposed limit.

As I posted previously, he uses PUPrime mainly.

[okgo]

Think about it, if someone really knew how to make money from the markets reliably, would telling other people how to do it be anywhere near the top of your list of 'things to do'?

[Shnozz]

okgo said:

It isn't investing, its gambling, which so far he's been lucky to be on the right side of.

It is likely he's been suckered in by someone on instagram pushing their trading academy dicking about in a rented lambo or similar flogging 'signals' on the basis of "you too could live like this working from the beach for just £30 a month". It is remarkably common, and like any other pyramid scheme, preys on the people who don't know any better, similar to a scratch card type audience in the main I'd have thought.

I'd be very wary of it personally.

Square Leg already posted on the right thread a month ago.

https://www.pistonheads.com/gassing/topic.asp?h=0&...

[Square Leg]

okgo said:

Think about it, if someone really knew how to make money from the markets reliably, would telling other people how to do it be anywhere near the top of your list of 'things to do'?

Probably not, but he’s done ok so far

[Square Leg]

Shnozz said:

okgo said:

It isn't investing, its gambling, which so far he's been lucky to be on the right side of.

It is likely he's been suckered in by someone on instagram pushing their trading academy dicking about in a rented lambo or similar flogging 'signals' on the basis of "you too could live like this working from the beach for just £30 a month". It is remarkably common, and like any other pyramid scheme, preys on the people who don't know any better, similar to a scratch card type audience in the main I'd have thought.

I'd be very wary of it personally.

Square Leg already posted on the right thread a month ago.

https://www.pistonheads.com/gassing/topic.asp?h=0&...

I’m still waiting a reply from someone

[shouldbworking]

There's also another common scam where they suggest a trading app, which shows fake profitable trades, but you can't actually take money out, only put it in (whereupon it gets pinched).

[Square Leg]

shouldbworking said:

There's also another common scam where they suggest a trading app, which shows fake profitable trades, but you can't actually take money out, only put it in (whereupon it gets pinched).

Well he’s not on that one thankfully.

Having just read the first few pages of the thread linked above, I think I’ll be keeping a very close eye on what he’s doing.

[Hoofy]

Make sure you do the maths on this.

If he's gambling £5 per pip on gold vs USD, that's 1c or $0.01.

It's great if it jumps up 100 pips ($1) but if (looking at the charts, he'd gone in at 6am, it went from 2031 and dropped to 2025. That's a £3k loss in 2 hours and whilst he might only have £700 in the account, they can legally request that he coughs up the rest.

This is fine in a bull market if he's going long - just hold and cash in the profits - but in a bear market, you'll get a slight recovery followed by more and more falls which has caught many a novice trader out for £££££s.

(I hope my maths works out but I hope you get the point if my numbers are out.)

And if he really wants to learn something, he's better to take a bath early on than think he's a trading god and go big resulting in a loss that will have him living at home until he's 35.