Spread betting tax situation

I used to work for professional gamblers and they never paid tax. However I can settle this debate for once and all in the new year as I am currently being investigated by the IR. So I will let you know what happens. If my betting profits are taxed then I will go to court to get a ruling if I lose and go broke in the process then I don't care because I will make such a big fuss about it that the IR wished they had never knocked on my door.
 
I applaud you Wayno for grasping this nettle. As you say when push comes to shove we need to know where we stand.

I know we are talking tax law not logic here but I doubt that the IR really wants to debate spread betting as such. They don't know where that will lead. For example one anomaly is not whether proceeds from SB should be taxed but rather why profits from CFD's and index futures are. None of them is 'trading' in the real world sense of dealing in goods and services. There is no product so no legal bargain. They could all be construed as gambling.

I can see 'sole income' being a problem if you insist on personal tax allowances but 'main income ' is a potential nightmare. Scraping a few grand while on benefit gets taxed but not if you are already well-heeled? All day plodders at £1/pt part with 40% while the occasional 30 minute scalper at £500/pt is home and dry? This is Treasury/political country not the local tax office.

But so what. My concern is that the regulation that gets you has little to do with all this esoteric waffle. How about failure to declare income. No ifs and buts, set proportionate penalties, easy meat. As I understand it you have to declare income whether you think it's taxable or not. They will draw the conclusions. Of course I could be wrong.

So it may well be a case of 'it ain't what you do it's the way that you do it'. Not a problem for me at the moment but I'm working at it. Any practical advice gratefully received.
 
Simply put,the IR will not,and indeed cannot under current law, assess any one who wins at a gamble for any further tax-if they did,there would be nothing to stop anyone going to their local bookies to bet on anything with the assurance they could set off all their losses against their income.
The IR know it is not in their interest for that to happen:they know 90% of gamblers lose so,in essence,they will tolerate the small amount of winners-that is my understanding of the situation.
 
Milt - do you know this for a fact? I'm not so sure. I understood that the Inland revenue can interpret the complicated tax statutues as they see fit,( obviuosly within reason, and within the law) on an individual basis
 
Ah,
Milt and CT there's a flaw in the arguments I'd suggest - which I'm not saying the IR WILL make use of, only that they probably could if required : All taxpayers are to be treated equally - yes, those purely gambling for fun and profit are taxed as gamblers, those doing so consistently and earning a living thereby are taxed as if it is income. I'm STUNNED your accountant didn't spot this, equal treatment for identical people is what counts, that doesn't suggest for one moment that people put into different pigeonholes will be dealt with identically. There doesn't seem to be a dividing line here, I would suggest that what will happen in practise is that an inspector of some sort will look at the figures and pronounce a verdict - proving you are identical to Mr X and should have been treated differently (as Mr X was) might be a bit difficult. I wouldn't doubt that precedent etc comes into play, but it seems to me to be the sort of area where you end up vindicated and very poor.
having put 5% of SB and Horse racing gamblers into the 'pro gambler' bracket and taxed them as income, yet leaving the other 95% under 'mug punter' and tadxing them on non-existent gains does not cause any problem for the IR at all - they don't have to tolerate a winning minority, just classify them differently.
This IS a rather bleak version of the possibilities - I suspect you can win for a good while before they start moving the goalposts around, but I've had my accountant warning me already at a level I consider quite paltry, phrased as 'not a problem yet, but it might be one year' so I think I agree with Bonsai to a degree here - this area is really a bit of a minefield, requires serious research to be vaguely sure of the position, and the IR can make the rules up a bit as they go along so a consiste t winner MIGHT have to invest quite heavily, one day, in tax fighting legal efforts.
Overall I suspect that the real answer is to move somewhere with looser tax laws (Montenegro? Is that the place?) if you are making significant and steady profits.
All the best anyway, 'where to bury the gold' is a problem we should all have ;)
Dave
 
Whenever I have questioned SB companies on this issue in more detail than just accept at face level it is tax free they become very uncomfortable and eventually they change tere tone and come up saying that you should obtain professional advice when income is mentioned. For what it is worth I believe if this was clearly not taxable then the SB companies would do more openly to spell this out when challenged. They hide behind the fact that simple SB is considered gambling and therefore any tax is paid by them but they do not cover the issue of someone who has moved from conventional full time trading to SB as a form of income.

There is a balance to be drawn here, clearly a problem of not informing the Tax office about earnings may catch up with you later. To deal with this one really should approach a well established and savvy tax specialist who will be able to provide professional assistance. The bottom line, if SB is taxable then more conventional trading would offer better value due to the spread alone.

One can only assume what did all the professional traders do before SB, if trading in futures,cfds, shares and options etc.

What is clear is that getting advice from an accountant may not be the most appropriate person to speak to on this as it may fall only in part within his/her remit. Have a look through www.taxationweb.co.uk and you will find questions posted with varying responses from tax advisers / accountants. In my own case I was advised to enter the profit in the remarks section so that I could not fall into the category of not informing them of additional income at a latter date. But this does not deal with the issue.
 
CT: i'd rather not go into more detail about this in this forum,i would simply suggest you look around for a more competent accountant/tax lawyer.
DaveJB:the IR just HAS to go off legal precedent and statute law,and now they have also to contend with European law too.Certainly,at a local level an inspector might try it on....but he won't get very far with it when it's referred higher up,for the reasons outlined in the previous post.
The leading case comes from 1925,Graham v Green KB 1925,9 TC 309,followed later by Down v Compston 21TC60 "gambling not a trade...however habitual" therefore not subject to Case 2, Sch D.
Also,not subject to CGT under CGT Act s.51(1).
Quote that lot to your inspector...
 
Last edited:
People should definitely look up the old thread that I know CT took part in because its all been hashed over before.

For those who are certain it can't be taxable I'd just llike to know how they explain:

1. How the IR has successfully taxed poker players before; and

2. Why there is a section in the IR Taxation Manual on the circumstances in which they can tax people who gamble.

No one has yet even tried to exlpain how you can come to the conclusion that there is no way it is taxable given those two facts. (although FWIW my reading of the case law would say that you're okay if all you do is spread betting, the problem comes if you trade shares as well)

wysi
 
wysinawyg - yeap I know it's all been brought up before, but I didn't find anyone who had or hadn't been taxed after being in a similar situation to me ( which with the number of traders leaving The City over last couple of years can hardly be unique!)
I'm just trying to find better advice, someone else in same boat, or be pointed in the right direction.

Wayno
 
If you work inside a spread betting company you know that most punters lose, you also know that these companies do not hedge there entire positions. Simply because they know that most people lose. Therefore the IR can not rule against the "Lucky" few that win else they would have to offer relief on the loses which are significantly higher. If you went to court that would be your case, either you are a financial god from heaven or just lucky. Whatever happens you will win, if you are ruled against you will become an instant guru through the publicity your case gets or the IR will not contest things.

If only the CPS could construct cases as well as the IR this country might be a safer place.
 
SB Tax

CT

Why don't you just do some minor trades using CFDs/Stocks? Then SB won't be your ONLY source of income. :cheesy:
 
Seguna I do, however - 95% of my P&L is from SB with the other 5% from CFD's. Maybe I just need to try and bolster my cfd trading..
 
SB and CGT

All

Look at it this way. CGT is chargeable for ANYONE trading normal instruments once they exceed the CGT exemption limit(£7900). This applies to pros with 100's of trades p/a or the private speculator with 2 or 3. Its the medium of trade that attracts the tax liability not the frequency or basis of trading. Do you know any 'professional' sports betting/gambling/arbitrage being taxed?

I think the IR will find it difficult to tax any SB profits under current rules without granting offset benefits on SB losses. :cheesy:
 
I was thinking about this same issue so and i read this in IG
Terms and Conditions.

<BEGIN QUOTE>
(23.5) You acknowledge that the taxable status of any Bets you
place with us may be dependent on your personal circumstances.
You acknowledge that Bets may be subject to tax
if, for example, they are made in the course of a business...
<END QUOTE>

This seems to confirm what Posters here have been already said.

Also You really dont want to bother with the IR, they can take
months to get back to you, if ever.
Your time and energy is better spent getting getting legal advice
from a specialist in this area. The lawyer will look at your situation
and compare to existing case law and give you an unbiased
opinion. When the inland revenue finally get around to you,
you can bet their opinion wont be unbiased (unless they are
sure they have no case against you).

The case law quoted already on this board(milt)would seem to
suggest that SB as a consistent and serious hobby is probably
ok. But there may counter cases the Inland Revenue could use
against us.

My own thinking is that if the revenue started going after people
who make money SBing then it would get reported widely, the
end result being to kill the spread betting industry (New account
openings will plummet for sure) and no tax will be raised
from it anymore.. Gordon knows he makes more money taxing
the SB losses (he gets 15% of SB gross profits, much more
than he would get taxing winners by 40%) and wont want to
kill this goose.
 
What is wrong with u people?

Do u want to give ur money to the inland revenue? Things like this just give them ideas!
 
U have earned that money-why should u want to give it to them so they can distribute it to penpushers, lazy bums who cant be bothered to find work or fraudsters who claim benefits in loads of different names or for people who have never paid into the system to take money from the kitty?
 
You must log in or register to reply here.

Similar threads

A
Spread betting and Tax
Replies
4
Views
3K
tomorton
T
J
Financial Spread Bets - are profits taxable
Replies
16
Views
10K
WesleyMantooth
W
M
Spreadbetting may not be tax free!
Replies
17
Views
7K
donaldduke
D
H
Spread betting and Personal Income Tax
Replies
17
Views
6K
jorune
J
A
A question about tax on CFD income
Replies
16
Views
25K
progix
P
Top