Forex and UK Tax Regulation

Hello everybody,

After having practiced on several demo systems from various vendors for the past few months, I am going dip my toe into the real world of Forex Trading.

It looks like I will be opening an account with Oanda.com (FXTrade) in the US but I am not sure of the tax liability in the UK (or in the US for that matter!?)

As oanda.com is US based, would I be liable to taxation (Capital Gains) on repatriating funds to my UK account?

Thanks in advance,
YY

Yes, and not just on repatriation. Any profits made worldwide are taxable for a UK tax resident, regardless of where they are held, or whether they are repatriated - see the current fuss about offshore banks being required to provide details to HMRC of their UK customers.

Jack o'Clubs said:

Yes, and not just on repatriation. Any profits made worldwide are taxable for a UK tax resident, regardless of where they are held, or whether they are repatriated - see the current fuss about offshore banks being required to provide details to HMRC of their UK customers.

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When I ve made enough money I m moving on a permanent basis to Bangkok, Thailand. I ve got an US fx account. I ll be wiring the money straight into a Thai bank account. In Thailand you are not taxed on foreign currency money you bring from other countries. I ll not be a resident of the UK so I think I should be living tax free.

tradewinds said:

When I ve made enough money I m moving on a permanent basis to Bangkok, Thailand. I ve got an US fx account. I ll be wiring the money straight into a Thai bank account. In Thailand you are not taxed on foreign currency money you bring from other countries. I ll not be a resident of the UK so I think I should be living tax free.

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Just one thought off the top of my head, since your account is US based you would need to check whether the US has a Tax Treaty with Thailand. I would imagine they have. (Tax treaties in case you are unfamiliar with them are what allows you to conduct business of some kind in one country whilst living in another without being taxed in both. The treaty between the US and UK is what prevents the US from taxing you but leaving it up to the UK.) Would also be an idea to check the details of such a tax treaty as the US is very hot on checking money movements particularly to countries in the the Middle East and Asia

Jack o'Clubs said:

Yes, and not just on repatriation. Any profits made worldwide are taxable for a UK tax resident, regardless of where they are held, or whether they are repatriated - see the current fuss about offshore banks being required to provide details to HMRC of their UK customers.

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Yup, it is a common myth that monies are not taxable until they are repatriated.

So Practically, for a UK residence you need to pay 18% of the net gain in the financial year minus the individual allowance of £10,100 ?

So if I make 1,000 trades between 5th April 2009 and 5th April 2010 and I start with £500 and end up with £20,000 (I'm optimistic) I'll owe 0.18 * (19,500 - 10,100) = £1,692 ?

Presuambly if I lost my £500 - I could offset 18% of this from my PAYE tax bill ?

Sorry, I'm new to this and trying to get my head around it.

azwhaley said:

Presuambly if I lost my £500 - I could offset 18% of this from my PAYE tax bill ?

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You cant offset a net CGT loss against PAYE/Income tax. But you carry forward the loss to future years (upto 3 years i think). So your next year CGT allowance will effectively be 10K + any losses from the previous few years.
But you have to declare the loss on your tax return to be able to do this.

Spread-betting is tax free in the UK. Viable option assuming you're not a scalper.

donaldduke said:

You cant offset a net CGT loss against PAYE/Income tax. But you carry forward the loss to future years (upto 3 years i think). So your next year CGT allowance will effectively be 10K + any losses from the previous few years.
But you have to declare the loss on your tax return to be able to do this.

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Donald,
Do you know are forex gains always counted as capital gains?
Can the IR ever decide they are income,and apply income tax?
eg if the trades provide your main source of funds for living
or if via multiple trades rather than a few major gains.
I ask because long ago when I worked in retail broking, punters would not want their account to have any name related to 'trading' or 'income' for IR purposes, in case their capital gains were considered income.

I know this thread was started years ago but the issue has yet not been resolved as regards whether Forex profits are considered as IT or CGT.

It appears since so few people must make a profit from Forex, we cannot find a proper answer to this question -

Can anyone confidently answer the question?
(I do not reside in UK, hence do not know the correct answer).

PS- for those who recommend people should use SB, the answer is you cannot get an MT4 account with an SB account.