Professional Day Trading

[CityTrader]

JonnyT - without doing a search- has someone on here actually paid Income tax on SB profits? How are loses offset? With all respect, this isn't some sort of apocryphal story is it?
I have spoken with a couple of SB firms, and they swear ( well, they would I guess) that current legislation doesn't make it possible for the IR to tax SB.

Wayno

 

[Skimbleshanks]

Bertie - I'd just like to say thanks for the posts, as it's very rare to hear it from the horse's mouth so to speak. Five tax inspectors in unison about SB certainly is reassuring to hear, but in situations like these I think the expression of 'expecting the best yet prepared for the worst' is the best way to look on it.

 

[sidinuk]

If you think you will make £100,000 a year from spreadbetting then my advice would be to trade futures instead. a) you'll make more than £100k thanks to the tighter spread and b) you know for sure it's going to be taxed and any loses can definately be offset.

 

[bertie]

SPREADBETTING AND TAX

i'd also like to hear of any cases where a spread better has paid tax on their winnings......

the SB companies are opening themselves up to being sued by spread betters who could be back taxed for six years or more if what they say on their sites about profits from SB not being taxable under current legislation is wrong.....don't foget they would have paid top tax counsel for advice on the subject......

i think the legislation may be changed in the future for SB.....especially if the ratio of winners to losers changes in favour of winners.....

i'm not saying this about any of the contributors to this discussion but in the twenty or so years i've been working in tax i've overheard an awful lot of rot from self appointed tax experts in pubs and clubs and restaurants......much of what they say is wishful thinking.....ie they are pulling a fast one on the taxman and are trying to look big in front of their pals.......

i can't wait to read a post from a spread better who is paying tax on his profits from spread betting....i'm more likely to get a phone call from britney spears begging me for a date i think!!!....

bertie

ps...s***t, brit just called...she didnt want a date...she wanted to know if her spread betting profits were taxable......i said we would have to meet to discuss it.....

 

[sidinuk]

on the subject of tax deal4free say this on their website:


Tax free profits

Financial spread betting is one of the most tax efficient ways of investing in the stock markets and other financial products. All profits you make from financial spread betting are free of Income Tax, Betting Levy and UK Capital Gains Tax.

The position as we understand for UK Residents it is that currently under case law, betting winnings are generally not subject to tax. Where spreadbetting is done on an ad-hoc basis, and as the law currently stands, winnings are not taxable. However if for example banks and investment firms started wholesale spreadbetting to complement their dealings in other financial instruments, then it would be quite likely that the tax authorities would challenge such a scenario and 'could' seek to have income generated from such activites taxed.
In addition, this status would also appear to apply to professional 'gamblers' and 'spreadbetters' where as it currently stands, the inland revenue do not seek generally to tax winnings on spreadbetting. It does appear that should the tax authorities wish to incorporate taxing such winnings in the future they would need to seek an amendment.
This does not however preclude individuals who may have a very particular position or case which creates a situation that applies to their own specific circumstances."

As of October 6th 2001 the Chancellor decided to abolish Betting Levy, making spread betting a completely tax free* way to trade.

(*Tax laws can change)




So that clears that up then!!!!!

 

[Skimbleshanks]

Bertie - lol.

Over the years there have been quite a few calls (on this BB and others) for anyone to own up if they pay tax on their SB profits, but to my knowledge not a single person has ever admitted they do.

 

[bertie]

SPREADBETTING AND TAX

hi skimbleshanks.....why am i not surprised that nobody has confessed to paying tax on SB profits?......possibly because nobody has paid tax on SB profits.....

hi sidinuk......i agree that if SB becomes a bigger part of the financial landscape the law may change......i don't think the legislation exists in the background to be applied by a smartypants revenue inspector trying to make a name for himself.....better to just introduce new law and catch us all cleanly rather than risk court cases.......lawyers are rich enough getting people to sue their local council when they trip over a leaf without giving them another excuse for a feeding frenzy....

sorry guys....must get back to brit!!!

bertie

 

[fltbear]

Hi again all,

Sorry to treat this so simplistically but PLEASE look at what constitutes income.

Then look at how income is taxed.

fltbear

 

[CityTrader]

ftbear... I think if you are carrying out a trade ( as in "profession" , not as in" buying and selling futures" per se) then the income is Income rather than capital gains.
Still nobody has ever paid Income tax???? No volunteers?

 

[Skimbleshanks]

A couple of years ago I read the statistic that only 112,000 people per annum pay Capital Gains Tax in the UK.

To me, that is a very low number, so I really wouldn't be surprised if the handful of people who might very well qualify for being taxed on their SB activities, are just ignored as it is simply not worth the hassle of collecting the tax.

 

[Mr. Charts]

I don't know, so many people not supporting dear Gordon Brown.
How will he manage?
Don't you guys who don't want to pay tax realise there are so many folk out there on benefits who don't feel like working who really need you to work hard.......

Please note I do know there are many out there who genuinely need help and can't look after themselves and I'm happy to screw MMs to help them manage.

 

[Trader333]

Skim,

You said that

only 112,000 people per annum pay Capital Gains Tax in the UK.

To me, that is a very low number ,

That is because a chargeable gain is only made when an asset is sold. There will probably be over well over a million people who will have assets that are appreciating but are holding onto them and therefore not liable to CGT yet.


Paul

 

[Skimbleshanks]

Or they have very good tax bods working for them, have a stash offshore, or just forget to declare it on their tax returns. :cheesy:

 

[CityTrader]

Sorry to keep harping on about this, but I'm hoping this will only prove to be an urban myth amongst day traders, but...

Has anyone owned up to the Inland Revenue, insisting that they pay Income tax on spread betting profits, when trading is your primary source of income?

 

[Trader333]

Wayno,

As most of the arguments on here say that spreadbetting is not subject to tax then I cannot think of any circumstances where someone would declare earnings from spreadbetting.

So the only way that someone could be taxed is if the IR decide to investigate a person who has made profits from spreadbetting. As up to 90 - 95% of spreadbettors lose money then that means that only 5% probably make any real money and it is eminently possible that the IR has never had cause to investigate any of these 5%.

I think you wont find anyone who will say that they have declared spreadbetting profits as earnings, I mean why on earth would they when the SB companies keep saying all profits are tax free. So even if you were to be investigated you have a good argument to say that the SB company told you all profits were non declareable ? So it is very unlikely that anyone will answer your request.


Paul

 

[Mr. Charts]

Wayno,
Why don't you just ask a tax accountant with experience?
There are plenty of unqualified views expressed here and I can't be bothered arguing with them and you shouldn't take my word for it anyway.
R

 

[CityTrader]

Richard, I have. my expensive, West End accountant doesn;t know the answer. This is why I'm having to pay a few hundred pounds for a tax counsel to give his opinion. Just looks like that things aren't as instantaneous in the real world as I'd expect!

Paul - someone on here ( JonnyT ?) said others on here had paid tax on SB winnings. Just trying to ascertain the validity of this point.

W

 

[Mr. Charts]

Wayne, my understanding is that profits are not taxable as such on SBs.
However, the local tax inspector has the power to decide to tax you on them if they are your source of income. I am also told this has not actually been tested in court.
I don't SB so my own accountant would not be the best person for you to ask anyway. However I believe there is a firm of accountants which specifically deals with "home" traders. I have a trader friend who I believe uses them and could put you in touch if you wish.
Best wishes,
Richard

 

[Trader333]

Wayno,

I didnt know that, I guess JonnyT may be the best person to ask under what circumstances the people he knows have been taxed.

Cheers


Paul

 

[oatman]

There's a guy in the weekend FT who writes a column on spreadbetting and online trading etc. I can't find a copy at the moment. I think his name's Alpesh Patel. Give a buzz, he should know.