My first post here!! So be gentle with me..I'Ve been trading for about 3 years, for myself (Dukascopy FX) and for Prop houses..Now I'm trading for myself again and find myself at a cross roads with whether to go with Prospreads (tax reasons) or Velocity.. and after reading 58 pages of this thread I'm none the wiser..However I did find this...
HMRC 8.10 Other types of trading and payments – Financial Spread Bets (FSBs)
This is betting on financial instruments and works in the same way as sports spread betting. It involves speculating by placing a bet on an index – one that is not created by a bookmaker – for example, commodity prices or the FT-SE100 index. In the same way as sports betting, financial spread betting is liable to General Betting Duty and is exempt from VAT under the VAT Act, Schedule 9, Group 4. Duty is calculated by the bookmaker based on the total amount due from customers less any winnings paid out. The duty rate for financial spread bets is 3 per cent of the gross margin. It remains exempt from VAT under the same Group.
AND THIS!!
I actually 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 (!).
The bottom line is that if you are a tax payer who wins at spread betting (or any other forms of gambling for that matter!) you should not be liable for tax on winnings. If you do not have any other regular taxable income other than gambling you will probably be classified as a professional gambler (your trade) and may loose your BIM22017 exemption. In any case if you are employed and pay PAYE you cannot be classed as a professional gambler and so do not need to pay tax on gambling winnings even if they exceed your employed income. The reason HMRC are reluctant ot classify anyone as professional is that a professional gambler could then claim relief against losses from gambling and against the spreadbet companies proportion of their gambling tax.
The vast majority who spreadbet, I would opine, do not do it for a living, and therefore they are completely safe from taxation. Those who do it for a living have enough cash to hire clever accountants who sort it all out for them. Nothing to stop a millionaire trader having a self-employed 'subsistence income' from a bit of consultancy work that he pays tax on. The revenue can challenge it, but due to the nature of current legislation, they're unlikely to win. Thing I discovered after starting work in the Financial Services industry is that tax law is much more open to interpretation than I ever imagined beforehand!
That said, I have never heard of anyone being taxed on spread betting but then people probably don't advertise the fact..
So is Spread Betting really tax-free?
BIM22017 - Trade: Exceptions & alternatives: Betting and gambling - the professional gambler
I don't know about anyone else.. But my take on that is just open a company and pay yourself a salary from it that you can live on.
Problem solved .. Pro spreads here i come..
From what you say, FP and any other DMA Sb will have an uphill struggle, no matter how good the product.
