hey F / all
I really really don't want to get back into the mix on this fascinating thread ..........the opinions differ (as usual) but my own view is the standard one ....expect Sh*t happens and go with the flow
F / anyone - any comments around the incorporation approach..?
i'm just looking at some options at the moment .......it is likely my main income stream will swing across to my trading income this tax year and I want to be upfront and fair re Tax ........but at the same time I want to ensure i'm not overpaying or missing legitimate benefits
N
Morning N
You have reminded me I must get back working on this topic again and of course answer the questions asked by Timsk - that he looked upon as being more conclusive on what after all is a very "grey" area.
Obviously - I don't know your own tax circumstances - but the main first question to ask you is -
Have you in the past been fined by the HMRC ( old Inland Revenue) for not declaring your full income - or been involved in any Tax investigation - whether individually or as a Director of a Limited company ??
If your answer is NO - and you have a clean history - that's half the problem out the way for a start and therefore favours you being able to spreadbet and take advantage of your so called "winnings" ( not profits ) on a tax free basis.
My own problem which I have already highlighted in this thread previously was that I was on the so called "hit list" as I had been initially fined by the IR over 25 + years ago for all silly things - such as having personally having 2 mobile phones ( one was for non business and my company was paying for it) and running family cars on my company and taking advantage of mileage allowances etc etc - so ended up having to pay additional taxes along with penalties and fines etc. ( They can be a lot more than the actual tax owed )
To make the matters worse I was then investigated then another 5 yrs later ( OK I was a multi millionaire at the time ) and found guilty of other minor Tax discrepancies on the buying and selling of other businesses - and fined fairly heavily.
From then on - its basically I am an easy target and would always be under the HMRC "microscope" during my working life - with another investigation going on maybe this next 6 months.
Next question -
Have you been paying any tax on any FX trading profits you have had during the last say 10 yrs ??
If you have - but it was not your main source of income - ie you paid more tax on your own other services side - It could be looked upon that its was of no great importance.
However if you have for example paid £10K + tax in the last 2 or 3 years from FX trading and now to decided to go full time and do it all through spreadbetting and not pay any other income tax - then the HMRC will have a problem with that - as they did with me.
I had ideally wanted to pay tax via my FX trading that was not via a spreadbetting company ( at the time it was with FXCM in the US ) but for every say £1 per pip
I traded there - I wanted to trade 50 time larger via UK spreadbetting company ( at the time GFK UK ) and not pay any tax on my winnings.
Because its was related ( connected - see that latest link you have already mentioned ) and I was looked upon as not an "occasional punter" who paid tax via my proper full time work - the HMRC at Birmingham would just not entertain it.
Here's me being an hypocrite - I dont like Banksters and Tax Evasion etc etc - but as far as I am concerned Tax Avoidance for 90% of the working population is legal and OK . My analogy is speeding - ie we all might break the speed limit by say 5 or 10 mph at some time - but the Police are not going to send you to jail etc - but break the speed limit by double or treble - then you should have the book thrown at you.
I can however understand that if I was only paying say £5k per annum income tax from declared trading - and then making £70 -300K income ( winnings) by doing exactly the same thing but via spread betting and not paying any Tax on it then the HMRC are missing out on say £20 -100k of additional annual revenue off just one trader.
As you I am sure know - the majority of spreadbetters lose money - so pay no tax anyway and then maybe the 10 -30% who did win over a period of a Tax year - already pay income tax via their main form of income - ie via there normal day job - ie being a Fireman / Office worker / Salesman / Doctor etc etc.
The HMRC have not got the time or resources to discover every Trader who might not be totally truthful - and of course it make sense to just ignore they guys who get away with just £2/ 3k per year and go after the full time traders who are playing with a lot larger accounts. If you are going to fall into that category - get the proper and latest advice from a Tax Expert ideally employed by one of the Top 5 accountancy firms. It will cost you - but better to be safe then sorry - as I found out ;-)
Hope that helps N
Regards
F