Below content does not apply to US users
Filing your taxes and declaring earnings on eToro in the UK involves understanding how capital gains and losses affect your taxable income. If you incur a capital loss on eToro, it can reduce taxable gains in future years.
UK tax rules allow capital losses to be carried forward for up to four years, offering opportunities to offset future gains. This is particularly relevant for frequent or high-volume traders looking to optimize their tax position.
Is eToro a taxpayer in the UK?
eToro is a taxpayer in the UK due to its regulatory oversight by the Financial Conduct Authority (FCA) and its physical presence in the United Kingdom through an office in London.
eToro fulfills its tax obligations within the UK jurisdiction and facilitate certain tax-related aspects for its users based in the UK. However, UK individuals remain responsible for ensuring compliance with UK tax regulations, and must consult a qualified tax professional for accurate guidance on personal tax liabilities related to eToro transactions.
What types of trading taxes are charged to UK eToro users?
The trading taxes charged to eToro users in the UK are listed below.
- Capital Gain Tax: Capital Gain taxes are applied to the trader’s gross profits. Capital Gain taxes are calculated by summing all realized profits minus the losses during the solar year, and the result is taxed with a percentile rate. Capital Gain taxes are not applied if the eToro trader losses are higher than its earnings during the solar year. For example, if there’s a capital gain tax of 25% and the trader has earned 1000$ during the solar year, the eToro trader must pay 250$ of taxes.
- Dividends Tax: Dividend taxes are applied to eToro traders who have received dividends during the solar year. UK shares on eToro have no withholding tax, while US shares incur a 30% withholding tax to UK traders unless reduced by completing a W8BEN form.
- Crypto Tax: The Crypto tax applies to trading crypto CFDs, real cryptocurencies, or eToro users holding cryptocurrencies. The HMRC defines selling, exchanging, or paying with cryptocurrency as a “disposal,” making any profits taxable.
- Copy Trading Tax: The Copy Trading tax is applied to successful copy trades. Successful copies on eToro are taxable under the same rules as capital gain tax.
How to estimate UK trading taxes on eToro?
To estimate UK trading taxes on eToro is important to track earnings and losses on the eToro account.
Taxes in UK on eToro traders are applied only on earnings. Correctly calculating the earnings helps traders to estimate their eToro taxes, as they will avoid penalties to failure to report earnings accurately.
In the UK, trading profits and dividend earnings are subject to Capital Gains Tax (CGT). CGT applies only to closed trading positions, while open positions remain untaxed until realized. The UK tax year runs from April 6th to April 5th of the following year, with taxes assessed on the prior year’s earnings. For example, if you close a position in 2024, the tax liability will arise in the 2025 tax year.
Key table with tax thresholds under UK law for eToro is shown below.
| Overall annual gains | Amount of tax to pay |
|---|---|
| £0 – £12,500 | 0% |
| £12,501 – £50,000 | 10% |
| £50,001 and over | 20% |
What happens to UK Taxes in case of Capital Loss on eToro?
UK taxes in case of capital loss on eToro reduce taxable gains in future years.
For example, if you began 2023 with £1,000 and incurred a £100 loss, bringing your total to £900, no tax would be due in 2024. Moving into 2022 with £900, if you made a £50 profit, your total would rise to £950, but no tax would be payable in 2023 since the overall position remains below the original investment.
In 2024, starting with £950 and earning £250 in profit, your total reaches £1200, meaning a taxable gain of £200 would apply in 2025.
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 61% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
Trading history presented is less than 5 complete years and may not suffice as basis for investment decision. This communication is intended for information and educational purposes only and should not be considered investment advice or investment recommendation. Past performance is not an indication of future results.
Copy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.
Don’t invest in cryptocurrencies unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more.
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.