Basic tax questions

Hello,

Apologies for the inherent ignorance in my questions, but here goes;

I will shortly trade full time and over the last year or so, I have moved from 100% spreadbetting to 50 / 50 direct share ownership, so my tax situation is now more complicated.

I am looking at opening an IB account in my wifes name with LPOA. She has limited interest in share dealing, so I will undertake most (but not all) of the trading. Will any capital gain be against my wife's name?

How will profits from spreadbetting be viewed when I have no other form of income (I don't expect an answer here as this has been debated many times, but hey ho).

I also have a few small managed Forex accounts. Are returns from these classed capital gains?

Finally, is there anybody in the Sheffield area who trades for a living, and can recommend a good accountant. Or any advice on where to start looking?

Any advice welcome.

Cheers,
UTB

Hi The Blades

I don't have any answers to your questions other than to avoid the S6 postcode and stick to the south side of the city when looking for an accountant!!

Regards
Steve
Trevor Hockey Supporters Club

Not an accountant but I guess . . .

the blades said:

I am looking at opening an IB account in my wifes name with LPOA. She has limited interest in share dealing, so I will undertake most (but not all) of the trading. Will any capital gain be against my wife's name?

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Yup

the blades said:

How will profits from spreadbetting be viewed when I have no other form of income (I don't expect an answer here as this has been debated many times, but hey ho).

Click to expand...

What they don't know can't hurt you.

the blades said:

I also have a few small managed Forex accounts. Are returns from these classed capital gains?

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Always had it in my mind that Fx was CGT free (?)

I am looking at opening an IB account in my wifes name with LPOA. She has limited interest in share dealing, so I will undertake most (but not all) of the trading. Will any capital gain be against my wife's name?

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Not sure why you would want to do this (but that's none of my business), I mention it only to give you pause to decide whether you have a good reason for doing it. Yes she would be liable for CGT at least imho.

I also have a few small managed Forex accounts. Are returns from these classed capital gains?

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Probably. Contrary to popular belief fx trading is not tax exempt.

Your last question is probably the most important, and I cannot help you there, except to say that he will be able to answer all the others, and to say, make sure the accountant you choose is a "Chartered Accountant" The title is protected, basically anyone can call themselves an accountant and set up in business, but it is illegal to call yourself a chartered accountant without the necessary qualifications.

Give em a ring , they dont bite

http://www.hmrc.gov.uk/menus/officesmenu.htm

Some of this repeats the answers already given, but may be helpful in building a consensus!:

the blades said:

Hello,

Apologies for the inherent ignorance in my questions, but here goes;

I will shortly trade full time and over the last year or so, I have moved from 100% spreadbetting to 50 / 50 direct share ownership, so my tax situation is now more complicated.

I am looking at opening an IB account in my wifes name with LPOA. She has limited interest in share dealing, so I will undertake most (but not all) of the trading. Will any capital gain be against my wife's name?

Click to expand...

Yes, I do the same (I would guess for the same reasons as you). It's perfectly legitimate to use both of your CGT allowances in this way.

the blades said:

How will profits from spreadbetting be viewed when I have no other form of income (I don't expect an answer here as this has been debated many times, but hey ho).

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I'm with Dashing Blade. Particularly if you're paying some tax/CGT elsewhere this is unlikely to be an issue.

the blades said:

I also have a few small managed Forex accounts. Are returns from these classed capital gains?

Click to expand...

Yes.

the blades said:

Finally, is there anybody in the Sheffield area who trades for a living, and can recommend a good accountant. Or any advice on where to start looking?

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On one of the trading and tax threads someone recommends an accountant who specialises in self-employed traders. I can't remember anything other than having read that and it should come up in a search, but you may be better off using someone remotely who is an expert in what you're doing than getting a local accountant who isn't. I've needed specialist tax advice (not trading related) several times in the last couple of years and have always been disappointed by the quality of the advice I've received locally. To be fair the millions of pages of UK tax code can't make it easy for them...

thanks

Thanks to everyone who's contributed.

Re the chartered accountant - I've had 2 bits of advice (one backed by JOC here) - get a sprecialist, get a local one. I doubt I can marry the 2, with Sheffield not quite being the center of the trading world (it's the center of most other things, obviously )......Do I go the "specialist" of "local" route? Common sense suggests the former, but the latter is linked to how local offices view things, I suspect.

Re forex profits, I expected to pay tax but are profits classed as pure income from the off, or do they count against my CGT allowance (sorry if this is dumb).

As for calling my local tax office - I'm concerned about incriminating myself . Can I get anonymous advice?

Please Keep any advice coming, it's really appreciated.
UTB

the blades said:

Re the chartered accountant - I've had 2 bits of advice (one backed by JOC here) - get a sprecialist, get a local one. I doubt I can marry the 2, with Sheffield not quite being the center of the trading world (it's the center of most other things, obviously )......Do I go the "specialist" of "local" route? Common sense suggests the former, but the latter is linked to how local offices view things, I suspect.

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In my case I needed some specialist advice on a grey area (in some ways similar to the 'are s/bet profits taxable?' debate because the situation seemed to be treated differently for differing individuals in differing tax offices). Quite simply I went to a well respected local accountancy office, who were simply out of their depth because they'd had no experience of this matter before, and they were reduced to looking it up in the HMRC guidance (which I'd already done). The letter they wrote on my behalf to HMRC was useless and I refused to let them send it. I then went to one of the 'big 4' which cost a few quid, but I had a guy who'd handled this situation dozens of times before and wrote a letter to HMRC which told them the way to act, citing various previous precedents as examples. In my view as soon as you go off the beaten track, getting a specialist is a must. This wasn't trading related, I should make clear.

the blades said:

Re forex profits, I expected to pay tax but are profits classed as pure income from the off, or do they count against my CGT allowance (sorry if this is dumb).

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I think you might have a bit of leeway here, but basically this is not dividend or interest income (ie income tax), it's capital profit from a managed fund (in the same way that say, a mutual fund's profits would be treated) and hence comes under CGT.

Hi theblades

First of all I hope you are well and were not badly affected by the recent floods in your part of the world.

You could try under tax advisers in your yellow pages, any that mention CGT, will be worth following up with a peek at their web site, first one I checked locally came up with

Investment Business:-

* Investment Strategy

* Stock Market Portfolio Review

* Cash Management

* Capital Tax Planning

* All aspects of wealth management

ok, so mention spread betting to these guys and their face may twitch a bit and the eyes glaze over.....but wait there's more.

Another local route to consider would be to look in yellow pages under stockbrokers, phone them up and enquire as to which local accountants their active clients use, or just ask the stockbroking firm outright which ones they recommend.

Dont forget yell.com

http://www.yell.com/ucs/UcsSearchAc...anyName=&location=sheffield&search=SEARCH&M=0

http://www.yell.com/ucs/UcsSearchAc...on=SHEFFIELD&search=SEARCH&searchType=advance

You may get lucky and find that local specialist you require regarding the spreadbet element, good hunting.

Best wishes for your continuing trading success in your move to full time.

Blades, Lightning,

Stockbrokers have to use FSA recognised/registered accountants, as rare outside London as, er, FSA recognised accountants, probably one the big four (five, six?).

Basically, the FSA recognises a firm's conformity with FSA accounting procedures and requirements.

Note this is not the same as FSA authorisation of a member of a recognised professional body (RPB), eg accountants, solicitors, to provide investment advice.

This would be irrelevant to your situation - expertise in FSA requirements does not include areas beyond its scope or remit, ie non-authorised entities.

Grant.

thanks again chaps.

At least I know the direction I need to go in now (though I can't get enough info if anyone's lurking with more )

T2W at its' best.

UTB

the blades said:

thanks again chaps.

At least I know the direction I need to go in now (though I can't get enough info if anyone's lurking with more )

T2W at its' best.

UTB

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Blades... Couple of points if they are of any use...

Firstly, If you are trading full time then you can simply state that trading is your profession as such. As such you can produce a balance and loss sheet and be taxed under 'income tax'. You could also 'pay' your wife for services to your business. Millions of business owners do this and it is generally accepted by the IR, afterall, its up to you how much you want to pay 'the cleaner' / 'office girl' etc etc. All this can spread out your tax liability thus maximising the personal allowances of you and your wife. On top of that you can carry losses (should you make any) which means that if you have to return to full time employment then you will have a better tax code (I think I read that somewhere). My understanding is also that CGT can be offset by unused Income Tax allowance. This obviously means that you may be better just paying CGT. It therefore appears important that you correctly weigh up your personal situation. Some calculations might project figures for the two different methods. A large part of it might depend on your wifes current employment situation and how much personal allowance she uses up. If you're planning 4 kids and she's never gonna work again then its easier to plan for. If she's career minded and moving up the pay scales then its harder.

Let us all know how you go as this question is often popping up on T2W. As you say, the board at its best.

Steve. (Bristol City fan and we've got you at our place early in the season!)

Not many chartered accountants have much of a clue about the finer points of tax, let alone the taxation of dealing in financial derivitives. Try members of the Association of Taxation Tecnicians and Chartered Tax Advisors like me and my colleagues.

Joint account

back again

If I open a joint account with my wife, can we still offset all gains within that account against our joing CGT allowance? Do the accounts have to be individual to allow this?

Thanks again,
UTB