dig, dig and dig some more?
That way it will be big enough to fill with all the cows do do.
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Spread Betting Tax Free Profits or Not
- Thread starter counter_violent
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dig, dig and dig some more?
That way it will be big enough to fill with all the cows do do.
Winnings from gambling (which is what spread betting is classed as) is currently tax free in the UK.
The only possible exception to this that I can see would be if HMRC could classify you as a professional gambler. But in order for HMRC to do this you would need to have no other taxable income apart from gambling. If however you had a job and were on PAYE for example then there is no way that they could class you as a professional gambler.
So yeah, with perhaps the odd exception, spread betting winnings are tax free in the UK Tax Free Trading
The only possible exception to this that I can see would be if HMRC could classify you as a professional gambler. But in order for HMRC to do this you would need to have no other taxable income apart from gambling. If however you had a job and were on PAYE for example then there is no way that they could class you as a professional gambler.
So yeah, with perhaps the odd exception, spread betting winnings are tax free in the UK Tax Free Trading
SpreadBeta
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I found the following link/tribunal case (DR K M A MANZUR vs HMRC) which is interesting in that it was the taxpayer that was arguing that they were TRADING (in shares in this case) and the arguments that HRMC successfully put forward to say that they were not.
I assume that some of HMRC own arguments could therefore be useful if challenged by HMRC where they claim you are trading (if they ignore the obvious I'm betting so it's not taxable in the first place argument)
http://www.financeandtaxtribunals.gov.uk/judgmentfiles/j5199/TC00830.doc
HMRCs main arguments in the case, were that the taxpayer was NOT undertaking a trade because:
(1) a trader would have customers or clients
(2) the transactions would be of high volume (more than the taxpayers 300 trades /year)
(3) a trader would Limit risk exposure using hedging and derivative instruments
(4) a trader would Operate within strict rules on risk;
(5) a trader would not trade on their own account (I'm not sure about this one?)
(6) a trader would have formal relevant financial qualifications in support of a trading business, and is they are we're regulated by the FSA
(7) a trader would spend more than the 2 hours a day on their endeavour as this taxpayer did.
(8) a trader would not be dependent on market movements alone to make a profit.
Also, although not part of this case, I believe that that if you are trading CFDs and ALSO spreadbetting in similar instruments at the same time, then HMRC may try to argue that your spreadbetting is simply an extension of your CFD taxable trading (CGT) and therefore should be taxed.
It is also point number (6) above that may mean that if you have formal qualifications in a relevant financial trading area (say in you old day job) or we're previously considered a trader by HMRC and have now switched even 100% to spreadbetting they become more interested in looking at what you are doing in your spreadbetting and may look to tax you. (As having a trade of "professional gambler")
Bottom line from my perspective is that the further you are from the what HMRC considers to be a "trader", the less chance you have ever even being looked at by HMRC for tax on your "successful" spreadbetting, even if they are just chancing their arm..
I assume that some of HMRC own arguments could therefore be useful if challenged by HMRC where they claim you are trading (if they ignore the obvious I'm betting so it's not taxable in the first place argument)
http://www.financeandtaxtribunals.gov.uk/judgmentfiles/j5199/TC00830.doc
HMRCs main arguments in the case, were that the taxpayer was NOT undertaking a trade because:
(1) a trader would have customers or clients
(2) the transactions would be of high volume (more than the taxpayers 300 trades /year)
(3) a trader would Limit risk exposure using hedging and derivative instruments
(4) a trader would Operate within strict rules on risk;
(5) a trader would not trade on their own account (I'm not sure about this one?)
(6) a trader would have formal relevant financial qualifications in support of a trading business, and is they are we're regulated by the FSA
(7) a trader would spend more than the 2 hours a day on their endeavour as this taxpayer did.
(8) a trader would not be dependent on market movements alone to make a profit.
Also, although not part of this case, I believe that that if you are trading CFDs and ALSO spreadbetting in similar instruments at the same time, then HMRC may try to argue that your spreadbetting is simply an extension of your CFD taxable trading (CGT) and therefore should be taxed.
It is also point number (6) above that may mean that if you have formal qualifications in a relevant financial trading area (say in you old day job) or we're previously considered a trader by HMRC and have now switched even 100% to spreadbetting they become more interested in looking at what you are doing in your spreadbetting and may look to tax you. (As having a trade of "professional gambler")
Bottom line from my perspective is that the further you are from the what HMRC considers to be a "trader", the less chance you have ever even being looked at by HMRC for tax on your "successful" spreadbetting, even if they are just chancing their arm..
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TEAMTRADER
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Excellent post
Spreadabeta,
Excellent post.
TEAMTRADER
Spreadabeta,
Excellent post.
TEAMTRADER
JSMITH07611
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Please can someone be so kind to help me
i have understood that generally spread betting is tax free and cfd's are taxable.
based on that if a broker gives a bonus for joining. would that bonus be taxable.
so 1 if they give me a bonus on my spreadbetting account. 2 if they give a bonus on a cfd account. and 3 like with capital spreads they just apply the bonus to the balance but it is not specified whether it is a cfd bonus or spreadbet bonus.
(i know often it costs more than the bonus to release it but that is not always the case and my question is regarding the bonuses where the costs to release it do not amount to the size of the bonus thereby netting me part of the bonus)
i would be greatfuly if anyone could guide me on this
thank you
i have understood that generally spread betting is tax free and cfd's are taxable.
based on that if a broker gives a bonus for joining. would that bonus be taxable.
so 1 if they give me a bonus on my spreadbetting account. 2 if they give a bonus on a cfd account. and 3 like with capital spreads they just apply the bonus to the balance but it is not specified whether it is a cfd bonus or spreadbet bonus.
(i know often it costs more than the bonus to release it but that is not always the case and my question is regarding the bonuses where the costs to release it do not amount to the size of the bonus thereby netting me part of the bonus)
i would be greatfuly if anyone could guide me on this
thank you
TEAMTRADER
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It would not be taxable as the bonus is a gift - with strings of course. They don't give away money for no reason.
TEAMTRADER
TEAMTRADER
JSMITH07611
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Thank you teamtrader for the update. yes there are most times strings attached but sometimes with help from above i can still profit from them.
i was looking into it a bit more and noticed that there is now a tax on funds that you get a rebate on although it seems that it is only this instance where it is considered an "annual rebate" but cashback like credit cards and quidco are not taxable and i would suppose like you are saying one off bonuses from forex/cfd/spreadbet companies are the same.
apparently even hargreaves landsown is making a legal battle out of it.
see some links
http://www.hl.co.uk/news/articles/hargreaves-lansdown-challenges-discount-tax
http://www.bmmagazine.co.uk/in-busi...ek-supermarket-loyalty-bonuses-could-be-next/
over here you can see that it was specific to annual rebates
http://www.yourmoney.com/your-money...-tax-on-fund-cashback-sets-worrying-precedent
http://webcache.googleusercontent.c...discount+tax+loyalty&cd=5&hl=en&ct=clnk&gl=uk
let me know if you have any updates
thank you
Strugglingtrader
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Dear Postman,
I hope you are well. I've just started a thread that was asking about pretty much what you have mentioned in your post. Please forgive me in advance for asking but this letter you have from the IR stating that you do not have to pay tax on your winnings even though it is your sole source of income. Is their a limit to the size of gain?
I mean are you making £40-80k on the £40k account split between two SB firms? Apologies but this will really help me get some sense of where one would stand.
Cheers in advance.
Strugglingtrader.
Strugglingtrader
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Dear F,
I have been following your postings and I just wanted to say it is a real pleasure to read your comments. God bless you for sharing your experiences and no doubt those blessings from the endless number of people you have helped will give you tranquillity.
Please could I ask you a simple question. Would someone spread betting successfully move to a tax free jurisdiction (Monaco) and then avoid all tax on their spread betting even if it was their sole source?
Thank you for all your guidance.
A struggling trader.
Forexmospherian
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Thank you for your comments
You can get temporary residential status to live in Monaco by depositing $500k with one of their banks along with other requirements being met.
To obtain full residence could take 3-5 yrs I believe and unless you are already worth a few million forget it ;-)
Why don't you be upfront and going along to your area tax office and tell them you plans etc and see what they say.
What ever they say - get it in writing and authorized by another outside body - as its such a grey area and can depends on many circumstances that may be looked upon by other offices around the country.
If you don't fancy doing that - well just hope you never get investigated.
Regards
F
2George
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As far as I am aware the government have no requests from HMRC to remove the tax free status of spread betting.
The doubt has previously been when a trader trades as a business with money other than his own but so far HMRC have not thought it sufficiently meaningful to start changing the law.
Remember the SB companies pay a lot of tax.
George
Strugglingtrader
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Tell you the truth I am too scared of going up the tax authorities, in my life I've found I always get the short end. There is fight or flight right and I would rather just move than deal with the complications, but my understanding is correct that if I moved out of the UK then I don't have to pay tax except for where I am living? I'm thinking anywhere that has zero tax it doesn't have to be Monaco.
With respect to your comment about time, if the amount of time I'm in my trades is added up it probably totals about 2 hours a day for 5 days a week. So my spread betting time is actually generating me more income than the time I spend in my other income generating activity. It will be a difficult assessment for the authorities based on time and I just think what is the point at which it is better to leave?
Any thoughts?
Best
ST
counter_violent
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As long as you maintain some form of income, a means of supporting yourself, then you have nothing to worry about ref HMRC regarding your spread betting activities.
I was corresponding with a successful full time trader on another forum. He was giving me some advice which included the following -
"Oh, one thing on the spreadbetting "tax-free" - if you ever decide to only make a living from trading, it's not tax free at all. As I found out...
Basically it's tax free if you have another job that makes you enough money to live on. But as soon as your only job is trading, HMRC is VERY interested in the profits you make. At first I thought that my profits will fall into capital gains tax. Sadly, capital gains only applies to assets that you don't trade intraday. Placing multiple trades in a week immediately disqualified me from CGT.
So after paying an arm and a leg in tax last couple of years, I decided to run my trading through my own corporation"
"Oh, one thing on the spreadbetting "tax-free" - if you ever decide to only make a living from trading, it's not tax free at all. As I found out...
Basically it's tax free if you have another job that makes you enough money to live on. But as soon as your only job is trading, HMRC is VERY interested in the profits you make. At first I thought that my profits will fall into capital gains tax. Sadly, capital gains only applies to assets that you don't trade intraday. Placing multiple trades in a week immediately disqualified me from CGT.
So after paying an arm and a leg in tax last couple of years, I decided to run my trading through my own corporation"
I usually play on online casinos, I do not make a lot of money on them, sometimes I make and sometimes I lose but in general I can not understand why but most of the time I win. My favorite game is Poker and my biggest win was 10000 $, my opinion is that people must not pay taxes from winnings cause Luck is Luck hah. If u want to play in the best casionos you should know that best casinos not blocked by gamstop, this can help you also if you have problems with gambling (playing to much ) you also can put the limit of lose or to restrict yourself from casino.
You should keep doing what you're doing.
