Are broker commissions tax deductible?

So, are broker commissions tax deductible? To answer this, let’s first make clear what we mean when we talk about broker commissions. 

Broker commissions are fees paid to someone who facilitates a transaction for you. This can be anything from a house sale, to an investment and more. For the purpose of this guide, let’s say that we’re referring to fees that you’d pay to a FX investment broker. This often works out as a fixed percentage of your investment profits.

In this case, you’d be doing a tax return based on capital gains that you earn via the investment – and you are able to deduct these. 

How are broker commissions tax deductible?

You can deduct your broker commission as an allowable expense from your tax return. In fact, HMRC allows you to deduct anything that you’ve wholly and exclusively spent on your business. Within reason, of course. 

In order to deduct expenses, you should keep track of them using a spreadsheet or accounting software during the tax year. This way it’s a bit easier to keep things organised. Once you’ve got everything together, you calculate the tax you owe by deducting your expenses from your overall investment earnings. You’re only liable to pay tax on the profits.

When do I do my tax return?

If this is the first year you’ve had to do a tax return, you should first register for Self Assessment online. This is the process of letting HMRC know that you’re receiving untaxed income.

What do I owe?

To calculate what you might owe, plug your earnings into our Capital Gains Tax calculator.

Is anything else deductible?

Yes, there are lots of expenses that you can deduct from your earnings to reduce your tax bill. Here’s a list of a few of them:

• Accounting expenses
• Mileage
• Office space
• Broker commissions
• Tech equipment 
• Business travel expenses
• And more

Just make sure that you keep record of everything to present to HMRC. They can ask you for evidence moths after you’ve actually filed your return.