Captial Gains Tax rate on CFD trading when you have no income

[1nvest]

from what i have understood you are quoting "City Index Ltd v Leslie".
In that case Mr leslie actually opened a "Spreadbet" account. and even so the judge considered his trades to be cfd's

Correct, It was a case where indeed what started off as "I'm spreadbetting and I'm just a wager" turned into an argument that its a contract for difference.
In the case, Leslie (an individual) was placing a bet on FX contracts...which is irrelevant. also irrelevant is whether it starts as a spreadbet or not. its the ramifications of the case. The case goes on to establish the difference between the two
i'll transcribe it for you...
"even though those contracts were in fact wagering contracts"..
"that contract was enforceable and constituted an exceptions to the Gaming Act 1845 created by the provisions of the Financial Services Act 1986"
ergo:
A CFD is an exception to the Gaming ACT1845, even though those contracts were in fact wagering contracts.

Now if you are bringing me proof from Mr Leslie according to your logic all spreadbet trades would also be taxable and the consensus of all brokers and forums is that at least spreadbetting is tax free

what proof are you going on about, im using the same case HMRC are using. i'm well aware, in fact we all here, are of the tax differences between the two which as it happens goes on to state in the same case...again i'll transcribe for you..
"Mr Pooley, a director for the plaintiff (city index) accepted in cross examination that its business is bookmaking, that it dealt in naked betting transactions and that its clients could properly be called punters whose receipts were not subject to either income or capital gains tax"

I honestly dont think this can be clearer that spreadbetting is not subject to income or capital gains tax whereas a CFD is an exception to the Gaming act of 1845
"even though those contracts were in fact wagering contracts"..

differentiates between leslie and others with leslie being equivalent to a company trading

yep, HMRC are very kind in stating that the tax implications are different for a company. they use corporation tax, Leslie was an individual. The case again is irrelevant. its the distinction that the law makes differentiating between CFDs and Spreadbets
Now, you can read the case yourself, but im going to urge you again.
ITS NOT here you need to debate your case. its the ones who have set this law. I'm not going to go backwards and forwards on this
your mate won some money, and i think thats tremendous.
however he didnt do his due diligence perhaps in understanding the tax implications and instead, retrospectively, of taking responsibility is looking for ways in which he can state his extra special CFD was merely just a CFD. whereas HMRC and the judge have been through this over and over

I used to work for HMRC. they are a lovely bunch, but they set the law and they are very hard to change.
they love bringing them in, its much harder to retrospectively change
i'll leave you to it and wish your friend the very best of luck
Remember its not me you need to argue with, all this time all you have to do is pick up the phone and call them

 

[gi trader]

@1invest thank you once again for your time.
I see that you are very knowledgeable (and probably more far more than me as i am just a layman) and am really not trying to argue but rather understand.
I hear some of the points you are making from the leslie case. it appears to me that the leslie case does sound like my friends profit would be taxable, but what i have not understood is that accordingly if somoene would spread bet with a broker on fx or indexes etc that would also be liable for tax. as leslie himself was spreadbetting. That is what lead me to think that there was something else underlying in leslies motives such as offsetting his tax bill as opposed to just either winning or losing money which would classify his trades as cfd's. But i know your position is clear that i am incorrect. and your opinion is that every spreadbetting is not subject to tax. so please help me to understand what you are saying.

please could you define to me clearly when would spreadbetting be taxable and when it would not. for example if i spreadbet £1000 a point on gbp/usd would that be similar to leslie and a cfd or would it be considered a spreadbet tax free?

 

[1nvest]

@1invest thank you once again for your time.
I see that you are very knowledgeable (and probably more far more than me as i am just a layman) and am really not trying to argue but rather understand.
I hear some of the points you are making from the leslie case. it appears to me that the leslie case does sound like my friends profit would be taxable, but what i have not understood is that accordingly if somoene would spread bet with a broker on fx or indexes etc that would also be liable for tax. as leslie himself was spreadbetting. That is what lead me to think that there was something else underlying in leslies motives such as offsetting his tax bill as opposed to just either winning or losing money which would classify his trades as cfd's. But i know your position is clear that i am incorrect. and your opinion is that every spreadbetting is not subject to tax. so please help me to understand what you are saying.

please could you define to me clearly when would spreadbetting be taxable and when it would not. for example if i spreadbet £1000 a point on gbp/usd would that be similar to leslie and a cfd or would it be considered a spreadbet tax free?

That's easy to answer, again HMRC have laid it out for you
Firstly the most relevant question.

when would spreadbetting be taxable and when it would not

Spreadbetting is not taxable. With exceptions about "carrying on a trade" which is another case entirely. And wouldn't have been taxable for Leslie
Alas, time wasn't on his side. In the transcript I gave you, it makes reference to the Financial Services Act 1986. which defined a CFD as...
making a profit or avoiding a loss blah blah, all the things you mentioned sound very much like a spreadbet.
That was precisely the issue. It was the definition. not the tax treatment that was important in that case. not whether its an individual etc etc
It was 1990 and "retail" CFDs hadn't taken off
CFDs had been around for ages but not in the way it is now. It really was a contract, it also meant somebody had to do something (the primary differentiator for betting...which is its just a gamble). City won the case, because of a few things..Leslie called them on the phone, City themselves had to physically to create the position to enable the contract to happen not just a simple case of saying price is going up, i bet it will go higher..
City won.
so now when you read HMRC and it says a CFD is not simply a wager, and then goes on to say subject to section 85 of the financial services act 2000 (after CityVsLeslie 1990)..its because city vs leslie set a precedent. not in its tax treatment, but by the very definition itself.
have a look at article 85, look at its original state and look at the amendments that have been made since then. loads have taken place.
simply the definition was at fault, as such the definition of a contract for difference says its a, b, c, d "unless it isn't". thats what has changed

the law has always been the same spreadbet is tax free, CFD is taxable. the definition of what constitutes a CFD has now changed. which HMRC refer you to.
your mate has used a CFD, had he used a spreadbet, the law would have been fully behind him. Its not i'm afraid behind him and HMRC have tried to tell you in essence its not simply a wager and told you where to read all about it.
Hope that helps, and please like i say, last time...speak to them

 

[gi trader]

thank you will try digesting it over the weekend. do you perhaps have some links to leslie's case and also article 85. just want to be 100% looking at the right place. thank you