Hi Tim
This is absolutely so unbelievable - we are just so far apart on opinions here - we may as well be on different planets.
Not much doubt about that FoMo. I'm on planet earth - which one are you on?
It is absolutely ludicrous to say SB companies would go into meltdown by the HMRC admitting there is a proportion of traders who will not get "tax free status"
- especially when this proportion is so small.
You argument just does not make sense.
I could accept your point if you can tell me (and all other SB clients out there) exactly who will and won't be liable to pay tax of their profits. None of your vague wishy-washy answers: a black and white explanation backed up with evidence from HMRC policy documents please.
If you can't do this (and you haven't yet), at least answer me this: who would open a spread betting account knowing that a randomly selected number of profitable traders will pay tax while others won't. Imagine the sales team at ETX:
Prospective new client: "Tell me, will I be taxed on my profits if I make any?"
ETX Rep': "Well, if it's a sunny day and the tax inspector assessing your return is in a good mood, then probably not. However, if he's had a tongue lashing from his Mrs and missed out on promotion (again), then you can expect to be hit for all you're worth."
Prospective new client: Oh, that's great, crystal clear, thanks. I know exactly where I stand now". Not.
SB companies couldn't conduct their business on that basis and I'm equally confident that HMRC don't conduct theirs on that basis either. I accept that this is just my opinion and am very happy to be proved wrong and admit I'm wrong - if you can provide the evidence.
Its a known FACT - that for spreadbetting to work - more punters have to lose than win. In the trading industry - we all know that somewhere between 70 and 95% of all traders lose more money than they win.
Nobody knows the exact number - but in the UK for government classification - the figure is suppose to be a ratio of over 75% that will lose their money for betting agents to have spreadbetting status
The fact that we are left with 25% approx. - could be 10% - could even be 30% - who do win more than they lose and have a positive winning balance - whether £1 or £1 million per annum - then only a small percentage of those so called "punters" or traders will actually not be already paying some form of tax to the HMRC - ie the majority will have other income streams etc etc - its maybe only a few small percent who do not fit the real "tax free criteria".
I'm not sure what your point is? Yes I agree that most SB clients lose and that a relatively small percentage are profitable.
Now if you don't agree on that part please tell me - but why do the 75% of spreadbetters who lose every year even keep on playing - because if they knew the facts - why do they bother ??
You'll have to ask them, there could be any number of reasons. Off the top of my head I'd suggest . . .
1. They believe their trading will turn the corner into profitability any time now.
2. It's a good way to test out new methodologies trading small stakes: losses are kept to a minimum.
3. They treat trading as a hobby and enjoy the thrill of it and don't expect to come out on top, in the same way people go to the races or the bookies on a Saturday afternoon and know they lose money over time but enjoy it all the same.
Doubtless there will be other reasons.
FACT - the SB industry as changed over the last 5 -7 years. Why do they advise all the clients to take individual tax advice ??
Please tell me Tim ??
Its because they know - there will be a few - might be 2% -might be 7% of their clients who do not fit the tax free status - that's why.
FACT: you present 'facts' that aren't in any way germane to the discussion. Saying that the SB industry has changed over the last 5-7 years has got bu88er all to do with whether or not the profitable few pay tax on their winnings!
As for advising clients to get tax advice, this is because, as Jon pointed out right at the start of the thread in this post, some people use spread betting in tandem with - or as part of - other trading activities. It does not apply to the vast majority or 'ordinary' retail traders such as most of us here on T2W.
Now - let's get this back to more facts .
Please clarify what you mean by "more". You still haven't provided any, lol!
I had advice originally from both Grant Thornton ( GT |) another to 10 UK accountancy firm - the KPMG - ( a top 4 world wide accountancy firm)
Their advise was totally clear with me - FACT
There you go again FoMo. So you're clear about the advice you were given: that's not a fact!
You will not be able to look at investing totally in FX spreadbetting and expect to remain with a tax free status - whilst not contributing to the HMRC any other form of income tax etc .
So - I would fit in that small minority - it still might be a few thousand traders - but that's a fact.
Evidence? Again, just saying something is a fact doesn't make it so, regardless of how often and how loudly you repeat it.
I can understand many saying well why is this not been broadcast or made totally public.
Simple
Its not in the interest of either the HMRC or the SB companies - they both prefer it to remain under the "radar" - for totally different reasons.
I agree that the answer is simple, but not for the reasons you give. It's just not that Machiavellian. There's no cloak and dagger. It's in the punters interest for SB to be tax free - that's the primary reason why 99% of people open an account with them. That's the USP for the SB firms, enabling them to complete with the DMA providers who tend to have tighter spreads, faster execution, no re-quotes, less slippage etc., etc. This then means they pay lots and lots of lovely tax to HMRC and the government. It's a win:win situation all round - everyone is happy. The minute there's a shred of real evidence (only one shred mind - that's all that's required) that any profitable SB punter has to pay tax on their profits, then the SB firms have lost their USP and the whole premise upon which the SB industry is based will unravel in double quick time.
I personally don't want to now have to spend a few thousand pounds getting the same advice from another tops 3 accountancy firms - but I do suggest that if any members her in the forum - are full time professionals - only spreadbetting and are full time - paying no other form of income tax to the HMRC and are making over say £25k+ per annum - that they due pay for proper individual tax advice based on their own circumstances.
Now I am sure you also would agree with that Tim - and if you don't - well get your office etc to ring up 10 separate SB companies - and see what they say.
I am not a tax expert and I'm not offering anyone tax advice. Indeed, if any one is any any doubt about their tax liabilities, then I recommend they consult a suitably qualified professional.
I will also have to find Random 1234 previous comment from last year or so - his father was a top chartered Accountant - and he had originally spent time training with a large accountancy group - and he too confirmed their advice - which was exactly the same as I received from KPMG
More to follow - even though it should only be of interest to a very small percentage of SB traders - the other large majority have nothing to worry about - a long as they pay tax on their other jobs etc and are not behind etc with the tax returns and payments etc etc
This appears to be at the heart of your argument, that there's not a problem so long as the individual who makes a profit via spread betting has some other form of taxable income. Again, where's the evidence for this? Provide a link to the HMRC policy document that says this and details the amounts that have to be earned and paid to qualify.
