Tax in the UK

Grantx

Grantx

Forex trading in the UK has the advantage of spread betting. As far as I know this means that I can make as much money as I can without paying a single cent in tax ... with one big caveat: It cannot be my primary form of income.

I can only benefit from this if I have a full time job and spread betting earns less than my primary source of income. Is this true?

If I decide to become a full time trader, is there any way to benefit from spread betting?

Can anyone recommend a resource I can use to get more detailed information on this?
An accountant? This forum? HM revenue office?

Im at a crossroads here. Trade forex or futures. Both have advantages and disadvantages and the tax question is an important factor.

Many thanks.
 
Grantx said:
Forex trading in the UK has the advantage of spread betting. As far as I know this means that I can make as much money as I can without paying a single cent in tax ... with one big caveat: It cannot be my primary form of income.

I can only benefit from this if I have a full time job and spread betting earns less than my primary source of income. Is this true?

If I decide to become a full time trader, is there any way to benefit from spread betting?

Can anyone recommend a resource I can use to get more detailed information on this?
An accountant? This forum? HM revenue office?

Im at a crossroads here. Trade forex or futures. Both have advantages and disadvantages and the tax question is an important factor.

Many thanks.
More...

You're correct that spread betting profits aren't taxed; this is true of all UK gambling (taxes used to be taken out of your stake, and are now collected via a special tax on the profits of the bookmaker).

However it's my understanding that if you meet certain tests your profits could be classified as income:

  • The vast majority of your income is coming from this activity
  • You are making a consistent profit
  • You are trading in such a way that requires skill and expertise

In practice HMRC are reluctant to do this; once classified as income you could start writing off losses against other income, and also deducting trading costs (eg costs of data fees). Since most spread betters and retail futures traders lose money they wouldn't want to set a precedent here.

It's also possible, for example, for futures trading income to be reclassified as income (see here https://www.elitetrader.com/et/threads/uk-taxation-for-futures-and-options-trading.290262/). But again I think this is incredibly unlikely - it certainly hasn't happened to me (obviously not consistently successful).

By the way there are other disadvantages of spread bets - they're normally more expensive and you have counterparty risk. Personally I'd never touch a spread bet - I'd rather pay tax on futures trading.

GAT
 
Grantx said:
Forex trading in the UK has the advantage of spread betting. As far as I know this means that I can make as much money as I can without paying a single cent in tax ... with one big caveat: It cannot be my primary form of income.

I can only benefit from this if I have a full time job and spread betting earns less than my primary source of income. Is this true?

If I decide to become a full time trader, is there any way to benefit from spread betting?

Can anyone recommend a resource I can use to get more detailed information on this?
An accountant? This forum? HM revenue office?

Im at a crossroads here. Trade forex or futures. Both have advantages and disadvantages and the tax question is an important factor.

Many thanks.
More...
Hello, just want to ask which website do you use as your broker? I understand it has to be gambling/betting website to be able to categorize as non tax?
 
You must log in or register to reply here.
Back
Top