Trading from home - employment status.

[nkruger]

So............????

Spreadbetting is gambling and winnings are not taxable.

Thats it...simple...Doesn't matter how much you win, it's still not taxable, wheter it's £1 or £1 million pound on 'who wants to be a millionaire' or on the horses, regualr basis or a one off. A bet is a bet and a win a win. Gambling is gambling, theres no grey area. Gambling is not taxable. It's not an income.

Lets stop the confusement.

Spread betting in the U.K under current law is not classed as an income and not taxable.

Spread betting is not taxable.

What you win from spreadbetting on the markets is all yours. Not the tax office. All yours.

(currently under U.K legislation)

Do you pay tax on your winnings Lee ?

 

[nkruger]

As the footy has been going all 'rangey' for the last hour I thought I'd ring the Revenue and find out if I needed to pay any tax next year on my 'gambling income'

The nice man said no. Then he admitted he was not an expert, and would get someone more knowlegeable in these matters to ring me back. I requested a call within the next 2 months, which he was not amused by, and said it would be within 2 working days.

I'll keep you all posted....

 

[new_trader]

As the footy has been going all 'rangey' for the last hour I thought I'd ring the Revenue and find out if I needed to pay any tax next year on my 'gambling income'

The nice man said no. Then he admitted he was not an expert, and would get someone more knowlegeable in these matters to ring me back. I requested a call within the next 2 months, which he was not amused by, and said it would be within 2 working days.

I'll keep you all posted....

nkruger, I think this is where there will be a very clear distinction between what is classed as a taxable spread bet and a non-taxable spread bet. I think it's important that you make it explicitly clear that you are doing it full time as your main source of income. It seems absolutely absurd to me that someone could earn £1million/year and be forced to pay tax because they are trading with a direct access account whereas someone else can earn the same amount and pay no tax because they did it spread-betting. I just can’t imagine the IR saying “Duuhhhhhhh, we didn’t fink of that !”

 

[nkruger]

nkruger, I think this is where there will be a very clear distinction between what is classed as a taxable spread bet and a non-taxable spread bet. I think it's important that you make it explicitly clear that you are doing it full time as your main source of income. It seems absolutely absurd to me that someone could earn £1million/year and be forced to pay tax because they are trading with a direct access account whereas someone else can earn the same amount and pay no tax because they did it spread-betting. I just can’t imagine the IR saying “Duuhhhhhhh, we didn’t fink of that !”

Agree with all that.

Do you think the Revenue will see the difference in 'trading' in the market, at 'market' prices (Direct Access) or betting with a SB company at the spread bet prices (not always an accurate copy of market prices)

 

[new_trader]

Agree with all that.

Do you think the Revenue will see the difference in 'trading' in the market, at 'market' prices (Direct Access) or betting with a SB company at the spread bet prices (not always an accurate copy of market prices)

Not sure if your question is rehetorical, but this is where/how I think the main distinction will be made.

Non-taxable:

You own a portfolio of shares (made up of 1 or many companies) in the stockmarket. Lets say the portfolio is worth £10,000. You are worried about US recession, but you don't want to sell your holdings so you hedge your portfolio with a spread-bet. All your shares have dropped in value and your hedge is showing £5000 profit. You think stocks can't go lower and you are happy to have half your money back now, so you exit your hedge. You make £5000- tax free. I think this would even be applicable with a Direct Access account.

Taxable:

You are not hedging, you are regularly taking positions to make a profit on movements in the market.

This is the way I interpret the IR definition.

 

[Lee Shepherd]

With spread betting you are not buying any part of the market whatsoever, you are not trading on the markets, you dont have a say in the markets nor do you collect dividends or have voting rights, by entering into a betting contract it does not and will not show up on market volume. You will not move the markets no matter how much you bet.

In short, you do not own any part of the market and are simply 'betting' against the price offered by such companies, due to it being betting, this is covered under U.K tax law as (currently) exempt.

So, whether your 'earning' a 'wage'/ taking a regular 'income' it is not taxable in any way shape or form. It is simply betting, whether you win the lottery every week, win on horses, casino's, it's all the same, betting on the markets is the same as betting on 2 snails crossing the road and is currently not taxable within the U.K for U.K residents.

 

[Bagehot]

With spread betting you are not buying any part of the market whatsoever, you are not trading on the markets, you dont have a say in the markets nor do you collect dividends or have voting rights, by entering into a betting contract it does not and will not show up on market volume. You will not move the markets no matter how much you bet.

In short, you do not own any part of the market and are simply 'betting' against the price offered by such companies, due to it being betting, this is covered under U.K tax law as (currently) exempt.

You could use all those arguments for CFD's too, though. And they're taxable...

 

[Lee Shepherd]

so what are you saying?

I've made my position clear, make yours.

 

[Bagehot]

so what are you saying?

I've made my position clear, make yours.

Sure: for the average Billy Punter, it's not an issue, no tax is payable. For a major player, HMRC are likely to take an interest and has flexibility around the interpretation of what is, and isn't, gambling (see my earlier post where I got HMRC to interpret a spreadbet position as 'not a bet'). And you are shooting from the hip with poorly thought out arguments, rather than coming at this from a position of knowledge. Is that clear enough?

 

[Lee Shepherd]

Bagehot, how long have you lived in France?

 

[new_trader]

so what are you saying?

I've made my position clear, make yours.

Lee,

The only position that I want made clear is that of the HMRC! Are you speaking on their behalf? All I've posted is what I think based on how I interpret the tax law and what MAKES SENSE!

This is a quote from their website:

Whether or not a particular spread bet is taxable will depend on the terms of the contract and the economic substance of what is done.

Read the wording carefully. If the tax law is as clear an unequivocal as you make out why do they use terms like "will depend on the terms of the contract and the economic substance of what is done"??

Tax law is like any other law and we wouldn't need lawyers if it was absolutely black and white rather being open to interpretation.

 

[Bagehot]

Bagehot, how long have you lived in France?

About a year, and still have a lot of dealings with my friends at HMRC for all sorts of reasons (past employment, residency issues, investment income in the UK, a couple of UK directorships, etc), and as New_Trader suggests, there is no such thing as black and white when dealing with them...

 

[LION63]

How many of you have sought advice from an accountant regarding this issue of taxation? How many of you have bothered to read the HMRC guidelines about this subject? The answer is simply very few as is obvious from some of the posts.

Spreadbetting is gambling which is tax free and not tax deductible. The only individuals/companies that are liable for taxation are those that are deemed to be 'Professional' or are vendors of products/courses that take positions in order to demonstrate the workings of those products or enhance their reputations as good teachers.

The level of proficiency or good fortune in the markets is not a determining factor in being a 'Professional' in the eyes of the law or HMRC. An individual who is proficient/lucky enough to make a profit in excess of £1million is not a 'Professional' and will not incur a tax bill even if that is the sole source of income.

There have not been any cases brought by the Inland Revenue in order to get anyone to hand over tax on gambling profits where they do not deem the individual to be a professional. The fixation with this topic is baffling and what is sad is that it almost seems like turkeys asking for Christmas. Beware as your wishes may eventually come true.

 

[fifty2aces]

For what it's worth, I'm a final year law student, specialising in tax, and I'm not sure - even the quote:

Whether or not a particular spread bet is taxable will depend on the terms of the contract and the economic substance of what is done.

is pretty unclear, and that's coming from someone who reads this kind of mindnumbing, open-to-interpretation, bull**** every day.

The moral of the story is, don't get tax advice from a bloody internet forum - a lot of unknowingly ignorant people will seem very sure of themselves, and the cost of being wrong is very high.

If you make enough that tax is an issue, give yourself a pat on the back and speak to a tax accountant. If you don't, you've got bigger things to worry about than minimizing your tax bill.

 

[wasp]

The moral of the story is, don't get tax advice from a bloody internet forum - a lot of unknowingly ignorant people will seem very sure of themselves, and the cost of being wrong is very high.

If you make enough that tax is an issue, give yourself a pat on the back and speak to a tax accountant. If you don't, you've got bigger things to worry about than minimizing your tax bill.

simple really......

 

[new_trader]

How many of you have sought advice from an accountant regarding this issue of taxation? How many of you have bothered to read the HMRC guidelines about this subject? The answer is simply very few as is obvious from some of the posts.

Spreadbetting is gambling which is tax free and not tax deductible. The only individuals/companies that are liable for taxation are those that are deemed to be 'Professional' or are vendors of products/courses that take positions in order to demonstrate the workings of those products or enhance their reputations as good teachers.

The level of proficiency or good fortune in the markets is not a determining factor in being a 'Professional' in the eyes of the law or HMRC. An individual who is proficient/lucky enough to make a profit in excess of £1million is not a 'Professional' and will not incur a tax bill even if that is the sole source of income.

There have not been any cases brought by the Inland Revenue in order to get anyone to hand over tax on gambling profits where they do not deem the individual to be a professional. The fixation with this topic is baffling and what is sad is that it almost seems like turkeys asking for Christmas. Beware as your wishes may eventually come true.

LION63,

Let me see if I understand what you are saying correctly. Two people, lets say twins, identicle in every way including ability, attend a trading seminar and learn a particular trading style. They both open a trading account, the only difference being that Twin A opens a Spread Betting account and Twin B opens a Direct Access account. They trade side by side and call out each trade to ensure that they are both taking EXACTLY the same trades at EXACTLY the same time. At the end of the year, they have both made £1Million. Now, Twin A gets to enjoy every single penny of that £1Million, but Twin B must share a percentage with the HMRC. Next year, learning from his mistake, Twin B opens a Spread Betting account and by the end of the year has made another £1million. When the IR asks for their share he says "No, not this time. I did it all through spread betting" What you are saying is that the IR's response will be, "We're sorry, we thought you made it trading. No problem, you enjoy it all."

 

[LION63]

LION63,

Let me see if I understand what you are saying correctly. Two people, lets say twins, identicle in every way including ability, attend a trading seminar and learn a particular trading style. They both open a trading account, the only difference being that Twin A opens a Spread Betting account and Twin B opens a Direct Access account. They trade side by side and call out each trade to ensure that they are both taking EXACTLY the same trades at EXACTLY the same time. At the end of the year, they have both made £1Million. Now, Twin A gets to enjoy every single penny of that £1Million, but Twin B must share a percentage with the HMRC. Next year, learning from his mistake, Twin B opens a Spread Betting account and by the end of the year has made another £1million. When the IR asks for their share he says "No, not this time. I did it all through spread betting" What you are saying is that the IR's response will be, "We're sorry, we thought you made it trading. No problem, you enjoy it all."

YES.

 

[charliechan]

lion - but if they trade at the same time etc, they wont get the same price. trader a will always pay a larger spread so will not make as much. he will also suffer more 'spikes' etc. added up, those losses could well compete with paying tax.

 

[LION63]

lion - but if they trade at the same time etc, they wont get the same price. trader a will always pay a larger spread so will not make as much. he will also suffer more 'spikes' etc. added up, those losses could well compete with paying tax.

We are not going to do this dance.

 

[donaldduke]

LION63,

Let me see if I understand what you are saying correctly. Two people, lets say twins, identicle in every way including ability, attend a trading seminar and learn a particular trading style. They both open a trading account, the only difference being that Twin A opens a Spread Betting account and Twin B opens a Direct Access account. They trade side by side and call out each trade to ensure that they are both taking EXACTLY the same trades at EXACTLY the same time. At the end of the year, they have both made £1Million. Now, Twin A gets to enjoy every single penny of that £1Million, but Twin B must share a percentage with the HMRC. Next year, learning from his mistake, Twin B opens a Spread Betting account and by the end of the year has made another £1million. When the IR asks for their share he says "No, not this time. I did it all through spread betting" What you are saying is that the IR's response will be, "We're sorry, we thought you made it trading. No problem, you enjoy it all."

Change this slightly:
Lets say in year two Twin B make a million in his self select ISA account instead. (Say its 1999!)
Are the HMRC going to want a cut of that? No they would be laughed out of court.