I BET not a lot of people know this !!!

Hi every body just came across this and hope it answers a question i think we have misunderstood,

Spread Betting as a Tax-Efficient Trading Product


Q: So is Spread Betting really tax-free?

A: Spread Betting is only tax free if it is not your main source of income. For that reason it is probably not wise when opening a spread betting account to put your job description down as 'day trader' or 'trader' as it would then be rather difficult to claim at a later date that trading was not your main income if the IR was to query where you made your money!!!

I spent ruddy ages trying to establish the position of spread betting with the revenue, and in the end it was pretty clear - perhaps this will ring true with those who have investigated this with the revenue themselves? If you have a 'subsistence income' (i.e. enough to live off) from an independent source that you pay tax on, then HMRC can't tax you on your spreadbetting activities. It's only if you have no other source of income and you use it for your primary income source that the tax advantages may disappear. Spoke to the revenue office in Nottingham with a technician there, who specialize in people who make a living from gambling, so I guess he knows his stuff. He deals with people playing the horses, dogs, poker, even casino games (!)

This has been debated many times on T2W and the discussions have been largely inconclusive.

However the general consensus is that SB will not be taxable even if it is your main source of income because otherwise you will be able to offset losses and expenses against this tax. There is no legal precidence or case law for it to be taxable as far as I'm aware. What would happen if you made a profit and were taxed one year but then made a loss the next. Could you claim back some of the tax?

From the rule book - SB'ing is only taxable if you are getting income from the business of spread betting - not as a punter placing bets. The law does not stipulate that it becomes taxable once it becomes > 50% of your earnings and the concept of subsitence income is largely subjective. I could invest my winnings in a savings account which I pay tax on - if the interest is a couple of hundred a month I could claim that is subsistence income..?

Advice from my accountant tallies with what Hoggums says - if betting (or trading) is your main income, it could be income taxable, but not automatically, and IR are likely to resist efforts to get yourself into this bracket.

Of course, share trading is already potentially taxed for everyone, even if gains are not your main source of income, as a result of Capital Gains Tax. I understand that IR resist efforts by people who are clobbered for CGT to move such gains into the income tax regime as overall they lose much revenue as a result.

This could help explain their reluctance to income tax spreadbetters: a successful spreadbetter, by IR logic (not mine) could presumably quite readily shift into share dealing from spreadbetting and claim the income tax situation should follow them, costing the IR CGT.

Put it this way if anyone makes their living from spread betting then a) keep it very very quiet, and b) save a high proportion of your winnings so as to pay the tax man if/when he comes looking. Remember, the tax man can change the rules as they go along within reason.

Also, plenty of professional horse gamblers pay tax on their winnings as they're deemed as 'professional' and if you think about it it's very easy to prove.

Name one.

I hear this often but does anyone know for sure?

The fact is that tax is paid on every bet, win or lose, by the bookmaker, so there is no need to pay it again. This area is just full of unsubstantiated rumours and repeated myths. Winnings from gambling is tax free, end of story as far as I'm concerned.

How come we never actually hear from anyone who has paid tax on gambling profits - only from people who 'know of people' who do?

I personally know 2 professional poker players who have accountants to fill out returns, they pay income tax. Might be slightly different as I think the Inland Revenue regard poker as slightly separate from gambling, but I'd imagine horse betting could be in the same 'educated bets' sort of arena.

It's not taxable.

I might be wrong here so please kick me if I am.
The few times I have placed a bet on the Grand National the the bookie advised me to pay the tax upfront by adding a extra 15 % to the bet.
Is this not the tax element of if it?