Late March is when leveraged accounts get a second look. Brokers start issuing statements, the tax year's clock is running down, and positions that have sat quietly in the red since autumn suddenly need a decision. If you trade on margin, the run-up to 5 April is as much about risk as it is about tax, and once leverage is involved the two are hard to separate.
Start with a clean position review
Before tax enters the conversation, get an accurate picture of what you actually hold. Build a simple table, one row per position, with columns for instrument, direction, size, entry level, current price, unrealised profit or loss converted to sterling, margin requirement and interest accrued to date. Add two totals underneath: gross exposure and free margin.
That single page tells you more than any statement summary. It shows whether one position is quietly carrying most of the risk, whether your largest loser is also your biggest margin consumer, and whether the cash you think you have available is already committed as collateral.
Then check the boring things. Are there positions you opened for a short-term view and never closed? Are there hedges that no longer offset anything? A year-end tidy-up often removes more risk than any clever adjustment.
What the tax year end actually changes
The UK tax year runs from 6 April to 5 April. Nothing about that date changes how your positions behave in the market, but it does change how they are counted, and that depends entirely on what you are trading.
Know which bucket each position sits in
- Spread bets. For most UK individuals, spread betting profits fall outside capital gains tax, and losses cannot be offset against other gains. The exemption is not unconditional, though — if your activity amounts to a trade or profession, the position can change. Take advice if betting is your main income.
- CFDs. Gains and losses on contracts for difference generally fall within capital gains tax. Losses can usually be set against gains in the same year, or carried forward against future gains if claimed.
- Shares bought on margin. These are capital assets. Special matching rules apply if you sell and buy back the same shares within 30 days, which can defeat a simple tax-motivated sale.
- ISAs. Leveraged products such as CFDs and spread bets generally cannot be held inside an ISA, so tax planning there is limited to straightforward holdings.
This is general information rather than tax advice, and the rules depend on your own circumstances. If your positions are substantial or you trade frequently, an accountant who understands derivatives will earn their fee.
Timing disposals around 5 April
The annual exempt amount resets on 6 April and cannot be carried forward. If you have gains you intend to realise anyway, spreading them either side of the tax year boundary can use the allowance twice. That works well for planned exits. It works badly when it becomes an excuse to keep a losing position open for eleven extra days.
Remember that for capital gains purposes the disposal date is normally the date the contract is made, not the settlement date. A trade executed on 5 April belongs to the old tax year even if it settles later. Also check whether your gains are large enough to require reporting through HMRC's real-time service, rather than waiting for a self assessment return.
And if you are selling shares to realise a loss, do not rebuy the same holding within 30 days unless you are comfortable with how the matching rules treat it.
Margin interest: the slow cost
Interest on a debit balance accrues daily and is charged monthly, which is precisely why it gets ignored. A position held for six months can lose a meaningful chunk of its return to financing costs, and the longer it sits there, the harder it is to justify.
Check three things. The rate you are actually paying rather than the headline rate on the website, since higher balances often attract tiered pricing. Whether the rate has changed since you opened the position. And how the charge is calculated — some brokers apply a spread over a benchmark rate, some apply a fixed schedule per instrument.
Whether financing charges are deductible for tax purposes is not straightforward, and the answer varies with the instrument and your circumstances. Do not assume they are, and do not assume they are not. Ask.
Managing positions through the year-end window
Late December and early April both bring thin liquidity, shortened sessions and a scattering of market closures. Thin books amplify moves, and gaps over a long weekend can take out a stop at a level you never saw traded. A few habits make that period survivable:
- Reduce gross exposure before quiet sessions rather than during them.
- Check the margin ratio your broker applies to each instrument — it can differ from the headline leverage.
- Hold a cash buffer above your maintenance margin, not exactly at it.
- Note contract expiry and roll dates, especially on index futures and rolling daily products.
- Set alerts on margin level and on any position approaching a stop.
- Log in and look, even if you have no intention of trading.
Records, losses and reporting
Keep contract notes, monthly statements and a record of the exchange rates you used, because capital gains must be calculated in sterling even when the underlying trade was in dollars. Getting this wrong is one of the most common reasons a tax return becomes painful.
If you have made a loss you want to use in future, report it. Losses generally need to be claimed within four years of the end of the tax year in which they arose, and an unreported loss is an unused one. Many brokers now produce an annual tax summary — treat it as a starting point for your own records rather than a finished calculation.
A short year-end routine
Pick a date in the last fortnight of March and work through four steps. Reconcile every open position against your own records. Decide which positions you would close if tax did not exist — those are the honest ones. Check accrued interest and the margin buffer. Then deal with the paperwork, so that April is about markets rather than spreadsheets.
The traders who handle the year end well are rarely the ones with the cleverest tax plan. They are the ones who know exactly what they hold, what it costs them to hold it, and why they are still holding it at all.
Photo: viarami / Pixabay
