Are all my spread bet profits tax free?

Quoted by CityIndex:-
All profits made in spread betting are exempt from UK Capital Gains Tax*. This automatically saves you from losing a large percentage of your profits. As spread betting is a derivatives product, it’s also exempt from UK stamp duty. (Tax laws are subject to change and depend on individual circumstances.)
 
Ireland is not the same tax jurisdiction thankfully. UK tax laws are totally different to EU.
Exactly, and that is why someone living in the UK should make it their business to find out, and the best way is to take advice from a tax adviser who specializes in this area.

I am not being smart or funny, but having dealt with the tax authorities in the past, I know how they operate, and they purposely leave things vague, so that they can rake in more money in interest and penalties.

It is plain and simple - it you make money spreadbetting, then you should make it your business to find out, if you don't, then all I am saying is that you might regret it at a later stage, and that could be 10 or 20 years time, or even longer if they decide to fully investigate your bank/trading accounts.

The onus is always on you to declare, it is not up to revenue to find out, and if they asses you, again, it is up to you to disprove they do not have to prove.

The laws are always in favor of the tax authorities, and those with the knowledge of how to get around some laws with legal jargon, and taking advantage of special tax acts that are not common knowledge, make a lot of money, but if you look at the potential cost to you if you mess with revenue, they are well worth the money you pay them.

There is an old saying that is well worth remembering...

"better safe than sorry"

Lúidín
 
You have to use common sense, "can you make a living without paying tax?"
O course not.
Is Spread betting tax free?
Yes, as long as it is not you sole source of income, if it is then you have to pay tax. Why would companies state that you can earn a living without paying tax?
They don't, they may give that impression, but they all get out of jail free by stating in the paperwork that you should seek your own tax advice.
Spread betting as a leisure activity, i.e. you don't make a living from it, is not a problem.
If something is too good to be true then it is and don't get suckered into the line that HMRC don't want to tax it because their are more losers than winners (strange but you will find that lame defence) and that people would claim back tax on losses etc. HMRC are coming, huge emphasis on clamping down on tax avoidance, I just hope these people have put the tax to one side!
 
If the UK government taxed sb clients' gains, it would bring in negative tax revenues (credits and allowances for losses would be bigger than revenue gained from the winners) which isn't the point of taxation at all.
 
If the UK government taxed sb clients' gains, it would bring in negative tax revenues (credits and allowances for losses would be bigger than revenue gained from the winners) which isn't the point of taxation at all.

Indeed. :)

I noticed, when reading earlier discussions on this subject in this forum, that one member reported one of the "Commissioners of the Inland Revenue" (as it was then called, I suppose?) with whom he'd discussed it had himself made exactly this point, in order to explain why they wouldn't ever want or be able to classify this as taxable income.
 
If the UK government taxed sb clients' gains, it would bring in negative tax revenues (credits and allowances for losses would be bigger than revenue gained from the winners) which isn't the point of taxation at all.


Hi metrader

One of the questions I remember raising with KPMG Tax guys via my accountants and the answer was easy.

It would not need to tax the SB Clients gains - and then allow the losses to be used against tax paid on winners or other income.

Instead - the HMRC have other powers so that they can basically have their "cake and eat it" in special cases. Remember it only going to be a very small percentage of traders who fit the criteria we are on about - ie 1- Overall winners with profits in the financial year -( that's maybe less than 15-20% of all spreadbetters) 2 - Full time with no other income of which the spreadbetter is paying tax on ( again a very small percentage of the 15-20% ) I would say again less then 20% of the winners ) 3. Producing enough profits to make it worth while taxing ie if the spreadbetter only made say £9k profits in the year with no other income etc - he would not be taxed anyway .

Now if you want to know the game the HMRC then play - they identify the players first who might fit in this special category - ie from all spreadbetting companies - ie players with large capital account and with single wins over say £5k or what ever size they chose.

They then request a meeting

With me - unfortunately i was already on the old IR "naughty list" from business activities in 1985/6 . My first penalties for failing to declare all income etc was less than £4k - but then you are followed for the rest of your working life and generally investigated every 5 to 7 years. I had 3 investigations and the last one in 2010 - I was by then trading and fitted the "special criteria".

I was warned not to continue with both type of trading - ie paying tax on some broker accounts - but not on spreadbetting brokers and also admitting I was full time and planned to take advantage of the "tax free " situation. So I faced a so called additional "penalty" ( note the word - not purely a tax request on additional income) and when I wanted to challenge it - I would have been faced with fairly large costs as well as it being maybe stalled for another 6 -12 months whilst they wanted to investigate me in further detail

Remember in UK Law - you are innocent until proven guilty.

With the HMRC - its different - you are guilty and can be penalised and requested to pay ( or face additional fines or jail ) until you prove yourself innocent .

While all this is taking place - you also have to pay your accountant fees and of course additional costs for additional experts advice .

The odds are stacked heavily against you I can assure you - remember when you are interviewed - you have to swear on oath etc - heavy stuff - If you think trading is pressurised - I can assure you - its nothing compared to what I went through .

I negotiated myself a deal in the end - but was still not happy with the situation.

Yes you can do that - as already mentioned things are not just "black or white".

Talking of negotiation tactics - mine pale into insignificance compared to the stories I heard via some of my accountancy contacts . ie a short fall of VAT payments on a car sale business of over £1 million pounds of 8 years - settled for a one of quarter of a million payment to the HMRC.

If you think I am talking a load of tosh ( rubbish ) then i would immediately ask you the question - have you ever worked in the business world in a larger organisation at a Director Level ?

If you have - you totally understand what am saying - if not maybe then then its all new to you.


Regards


F
 
You have to use common sense, "can you make a living without paying tax?"
O course not.
Is Spread betting tax free?
Yes, as long as it is not you sole source of income, if it is then you have to pay tax. ..

Thats a very nice OPINION or interpretation of what was posted. Do you have any FACTS to back up your opinion?
 
Hi metrader

One of the questions I remember raising with KPMG Tax guys via my accountants and the answer was easy.

It would not need to tax the SB Clients gains - and then allow the losses to be used against tax paid on winners or other income.

Instead - the HMRC have other powers so that they can basically have their "cake and eat it" in special cases. Remember it only going to be a very small percentage of traders who fit the criteria we are on about - ie 1- Overall winners with profits in the financial year -( that's maybe less than 15-20% of all spreadbetters) 2 - Full time with no other income of which the spreadbetter is paying tax on ( again a very small percentage of the 15-20% ) I would say again less then 20% of the winners ) 3. Producing enough profits to make it worth while taxing ie if the spreadbetter only made say £9k profits in the year with no other income etc - he would not be taxed anyway .

Now if you want to know the game the HMRC then play - they identify the players first who might fit in this special category - ie from all spreadbetting companies - ie players with large capital account and with single wins over say £5k or what ever size they chose.

They then request a meeting

With me - unfortunately i was already on the old IR "naughty list" from business activities in 1985/6 . My first penalties for failing to declare all income etc was less than £4k - but then you are followed for the rest of your working life and generally investigated every 5 to 7 years. I had 3 investigations and the last one in 2010 - I was by then trading and fitted the "special criteria".

I was warned not to continue with both type of trading - ie paying tax on some broker accounts - but not on spreadbetting brokers and also admitting I was full time and planned to take advantage of the "tax free " situation. So I faced a so called additional "penalty" ( note the word - not purely a tax request on additional income) and when I wanted to challenge it - I would have been faced with fairly large costs as well as it being maybe stalled for another 6 -12 months whilst they wanted to investigate me in further detail

Remember in UK Law - you are innocent until proven guilty.

With the HMRC - its different - you are guilty and can be penalised and requested to pay ( or face additional fines or jail ) until you prove yourself innocent .

While all this is taking place - you also have to pay your accountant fees and of course additional costs for additional experts advice .

The odds are stacked heavily against you I can assure you - remember when you are interviewed - you have to swear on oath etc - heavy stuff - If you think trading is pressurised - I can assure you - its nothing compared to what I went through .

I negotiated myself a deal in the end - but was still not happy with the situation.

Yes you can do that - as already mentioned things are not just "black or white".

Talking of negotiation tactics - mine pale into insignificance compared to the stories I heard via some of my accountancy contacts . ie a short fall of VAT payments on a car sale business of over £1 million pounds of 8 years - settled for a one of quarter of a million payment to the HMRC.

If you think I am talking a load of tosh ( rubbish ) then i would immediately ask you the question - have you ever worked in the business world in a larger organisation at a Director Level ?

If you have - you totally understand what am saying - if not maybe then then its all new to you.


Regards


F

I know you are correct in what you say, as I have had some experience with tax authorities myself, and know the rules are in their favor all of the time.

Unless you know, or get someone who knows, how to get around the rules, then you are fighting an uphill battle.

Most will never find out, as you rightly say they are only interested in people who have already come to their attention in the past.

Let people think what they like, as we know how it really works, and that is all that matters to each of us as individuals.

If anyone reading these posts ever has to find out in the future, they will remember what we have said, and kick themselves in the ass for not taking heed when they could.

Lúidín
 
If anyone reading these posts ever has to find out in the future, they will remember what we have said, and kick themselves in the ass for not taking heed when they could.

Lúidín
Yes because we all make millions spreadbetting-easy as shelling peas;)
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Thats a very nice OPINION or interpretation of what was posted. Do you have any FACTS to back up your opinion?

Are you saying you truly believe you can earn a living in the UK and pay no tax? Really?

Actually it was at a forum on Tax that this was raised and I subsequently had an email exchange with Damien Green MP who said, if I can quote him "that anyone who believed they could live and earn a living in the UK and pay no tax was deluded" In any case the upshot was that the fact this tax avoidance being done "in the City" by "Spiv traders" given the populist hostility to the city and traders in general meant that this was "on HMRC's radar and they were aware" Only time will tell of course but if you are not putting the tax aside you are being exceptionally reckless. In any case based on threads here one company hangs its entire business on a letter to HMRC which asked "Is Spread betting tax free" to which they got the answer "yes".
A real case of asking a question in such a way that ensure you hear what you want to hear.
Ask HMRC the question " Is Spread betting tax free if it is my primary source of income" and see what answer you get! It may be in your best interest to do so.
Better still ask your provider, if they are so confident that your income is all tax free why they have in their paperwork that you should rely on your own tax advice? Ask them why you cannot have an outright statement on headed paper from their compliance department that “if you earn a living” spread betting it is tax free and see if they will provide it.
 
I know its impossible to prove a negative so we come back to the question open to anyone in the world:

Has anyone (apart from that man of scrupulous integrity FoMoFo) been taxed for spreadbetting in the UK.
 
Again wrong question, if you are spread betting as a leisure activity it is not taxable, we all know that. The Question should be, has anyone earned a living in the UK and not paid any tax?
Or If spread betting is your primary source of Income can you live and UK and expect to pay no tax?
 
Are you saying you truly believe you can earn a living in the UK and pay no tax? Really?

Actually it was at a forum on Tax that this was raised and I subsequently had an email exchange with Damien Green MP who said, if I can quote him "that anyone who believed they could live and earn a living in the UK and pay no tax was deluded" In any case the upshot was that the fact this tax avoidance being done "in the City" by "Spiv traders" given the populist hostility to the city and traders in general meant that this was "on HMRC's radar and they were aware" Only time will tell of course but if you are not putting the tax aside you are being exceptionally reckless. In any case based on threads here one company hangs its entire business on a letter to HMRC which asked "Is Spread betting tax free" to which they got the answer "yes".
A real case of asking a question in such a way that ensure you hear what you want to hear.
Ask HMRC the question " Is Spread betting tax free if it is my primary source of income" and see what answer you get! It may be in your best interest to do so.
Better still ask your provider, if they are so confident that your income is all tax free why they have in their paperwork that you should rely on your own tax advice? Ask them why you cannot have an outright statement on headed paper from their compliance department that “if you earn a living” spread betting it is tax free and see if they will provide it.

You are wasting your time, as people will always believe what they want, regardless of possible consequences.

Let the rest think and do as they like, after all, it is their money.

What I can't understand, is when to try to help someone out, by highlighting such issues, they will not even say thank you, as you might be correct, and if you are, and I do nothing else but spreadbet to earn a living, then I could face a hefty tax bill in the future, when interest and penalties are added for me not declaring my primary source of income.

I say let it be, as it will apply to very few anyway, so you are just wasting your time.

Lúidín
 
Again wrong question, if you are spread betting as a leisure activity it is not taxable, we all know that. The Question should be, has anyone earned a living in the UK and not paid any tax?
Or If spread betting is your primary source of Income can you live and UK and expect to pay no tax?


Just so you are aware, even when you have another source of income, the badges of trade may still be argued by the tax authorities, in relation to any activity that may constitute trade.

If it goes in front of a judge, where there is doubt, similar historical cases are referenced by the judge, and it is he that makes the final decision, based on all the facts at hand.

If you have been a bad boy, in relation to any previous dealings with the tax authorities, then this will not do you any good with the judge.

If you are a small fry, and the amount is small, you are probably better off making a deal with the tax authorities to avoid substantial legal costs should you lose your case.

Lúidín
 
Hi metrader


If you think I am talking a load of tosh ( rubbish ) then i would immediately ask you the question - have you ever worked in the business world in a larger organisation at a Director Level ?

If you have - you totally understand what am saying - if not maybe then then its all new to you.


Regards


F

Hi Forexmospherian

No - not in large organisations, but have some accounting experience (at work & personal).

Anyway I've never heard about anyone paying taxes on sb wins apart from you.*

Regards

*regarding individuals, for companies is different - see HMRC site ('A financial spread bet, if entered into by a company, will also be a contract for differences')
 
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If it goes in front of a judge, where there is doubt, similar historical cases are referenced by the judge, and it is he that makes the final decision, based on all the facts at hand.

If you have been a bad boy, in relation to any previous dealings with the tax authorities, then this will not do you any good with the judge.

If you are a small fry, and the amount is small, you are probably better off making a deal with the tax authorities to avoid substantial legal costs should you lose your case.

Lúidín

2 points about your post.
- If a decision on this had ever gone in front of a judge EVER !!!! There would be a case law for everyone to read about. THERE ISN'T.

- You keep posting your opinions, not facts, everyone has an opinion and they are of no value to anyone else but yourself.



The chap at the start of the thread will be helped by facts alone not other peoples opinions.

(Sorry for shouting). :)
 
Heres a few facts I dug out the last time this reared its ugly head over a year ago.

http://www.trade2win.com/boards/spr...tting-tax-free-profits-not-2.html#post2353956

...there are 'certain types' of spread betting that have been deemed taxable, here are 3.
1. Ones in which the outcome is > 1. http://www.hmrc.gov.uk/manuals/bimmanual/BIM22018.htm
This is why betting companies pay tax, because they offer odds to punters with <1 return, you add up all the odds in a horse race and bet on every horse and you will lose money. If you structure a spread bet so there is no chance of a loss thats not gambling(its a dead cert.) and you may be asked to pay tax.
2. Its a commercial transaction wrapped up to look like a spread bet in order to avoid tax. http://www.hmrc.gov.uk/manuals/bimmanual/BIM56900.htm.
3. If you have a 'Bot' which takes advantage of the emotional exuberance of punters (technically arbitrage). https://www.accountancylive.com/tax-and-gambling-man (under 'professional punters') again a dead cert, no risk.

Given the examples above I concede it isnt black and white, but if your spread betting on FTSE, Dow, Forex 100 times a day, it is! http://www.hmrc.gov.uk/manuals/cgmanual/cg56105.htm
 
This is from the March 2012 edition of Accountancy magazine.

http://www.butler-co.co.uk/articles/Tax-and-Gambling-Man-Accountancy-March2012.pdf

Please read it, its only 2 pages and there are pictures as well. :)
Some highlights.
-Betting is tax free in the UK - the professional gambler is outside the scope of tax. This is confirmed in HMRC's BIM para 22015.

-This is not a new precedent

-There has been NO decision so far as I'm aware in the UK where it has been held that a mere punter was carrying out a business.

-Will there be future legislation - There has been nothing to indicate that ... despite sophisticated techniques to make substantial profits from gambling.

--------------------------------------------------------------------

All pretty much contradicting a few laypersons OPINIONS on how the world should be according to them.
 
Heres a few facts I dug out the last time this reared its ugly head over a year ago.

http://www.trade2win.com/boards/spr...tting-tax-free-profits-not-2.html#post2353956

...there are 'certain types' of spread betting that have been deemed taxable, here are 3.
1. Ones in which the outcome is > 1. http://www.hmrc.gov.uk/manuals/bimmanual/BIM22018.htm
This is why betting companies pay tax, because they offer odds to punters with <1 return, you add up all the odds in a horse race and bet on every horse and you will lose money. If you structure a spread bet so there is no chance of a loss thats not gambling(its a dead cert.) and you may be asked to pay tax.
2. Its a commercial transaction wrapped up to look like a spread bet in order to avoid tax. http://www.hmrc.gov.uk/manuals/bimmanual/BIM56900.htm.
3. If you have a 'Bot' which takes advantage of the emotional exuberance of punters (technically arbitrage). https://www.accountancylive.com/tax-and-gambling-man (under 'professional punters') again a dead cert, no risk.

Given the examples above I concede it isnt black and white, but if your spread betting on FTSE, Dow, Forex 100 times a day, it is! http://www.hmrc.gov.uk/manuals/cgmanual/cg56105.htm


Your point 2 is very interesting as there is a large company that has "professional traders" using a direct market access, i.e not trading as a spread, that then "post" trade, manufacture a Spread bet around the trade for the sole purpose of avoiding tax. These are the sorts of Chickens that will come back to roost!
 
. . . All pretty much contradicting a few laypersons OPINIONS on how the world should be according to them.
Oh postman - what have you done!

I do hope FoMo doesn't see this as he'll soon realize that the big posh accountancy firm he's so impressed by know rather less about their profession than you do! Still, he can always send them the links, demand a refund for any fees paid and sue them for whatever amount of tax he's paid unnecessarily on his spread betting profits. Underneath the hot air and bluster, I believe he's a decent sort of bloke and I'm sure he'll happily give you 10% 'commission' on the money that's refunded!
:LOL:
Tim.
 
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