1

Suppose I borrow money and use it to buy stock, expecting the stock price to raise short-term.

HMRC provides clear instructions on futures and contracts-for-difference (CFDs), but none on custom types of leverage, that is, when a trader borrows money from one place and buys the stock from another.

Can the charged interest be subtracted from the net gain (or loss) of the trade?

Note: the question is about the UK taxation system. In the US, the answer seems to be yes, as per schwab.com:

In these cases, you may be able to deduct the interest on the margin loan. (This wouldn’t apply if you used the loan to buy tax-advantaged investments such as municipal bonds).

  • Note that in the U.S., investment interest is an itemized deduction. It can’t be used to adjust the gain or loss of the trade. – prl Apr 12 at 0:30
  • @prl How does that work? Isn't the overall result the same if you the deduct the interest from one category to another? – Paul Razvan Berg Apr 12 at 11:45
  • 1
    Paul, two main differences: you don’t get to deduct it in addition to the standard deduction; and the interest doesn’t reduce your “adjusted gross income” (AGI), which is used to determine all sorts of other income-based limits. – prl Apr 13 at 18:00

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Browse other questions tagged or ask your own question.