Smart Live Markets - Spread Bet on MT4

[Baby Clanger]

You can,t offset your losing trades against tax on Spread betting, but you can on a brokers account. This is often overlooked .

Sorry trev100, but have you got that the right way around?

I thought that one of the reasons tax was removed from betting was the extra admin (money) involved in people offsetting their tax with their loses.

 

[andycon]

You can,t offset your losing trades against tax on Spread betting, but you can on a brokers account. This is often overlooked .

I was just working on the net profit/loss and assuming a profit. If you are losing it probably doesn't matter which you go with, or are you saying you can offset your losing trades against other investment income. Having said that if you are losing at trading but have other investments making money maybe you should ditch the trading and stick with the other investments.

My question if anyone knows is, lets assume a net profit of £50,000 p.a. would you save enough on the spread to cover the tax liability. I suppose it depends how many trades a year I do about a 1000 trades a year.

 

[Baby Clanger]

I have been comparing TF and SLM spreads on a number of pairs all day and it is pretty close, some better some worse but the out of hours was worse on SLM.

Just taking a look at Alpari UK and they have low spreads. GBPUSD 1 EURUSD .5
EURGBP 1.1 GBPJPY 2.5 AUDCAD 2.3.

I've just compared 4 pairs (GBPUSD, EURUSD, USDJPY, EURGBP) on HotForex with SLM @ 17:50 GMT and I'm suprised to see that SLM have a smaller spread on all these pairs, by 0.3 on average.

However, if you are a profitable trader what prices will you actually be given by an SB? Will this difference in price (between what you ask for and actually get) be more or less than the saving in spread?

Overall, I think not.

 

[Baby Clanger]

MMMmmm……a pint of London Pride and a large juicy kebab on a Friday night, nothing better to get the juices flowing, so lets cut to the chase…is spread betting tax free or not?

Has anybody heard of or know of someone whose is earning a good living as a trader, who has declared their winnings to the taxman, is using a SB company and is not paying tax?

I’ve read dozens of pages in dozens of forums dedicated to this subject and no one has ever said yes. I know in this country it’s a private matter but that doesn’t stop someone from posting an anonymous answer.

The closest I’ve come to is when someone rang up his local tax office and ask the question “Will I have to pay tax on my spread betting winnings?”. The answer was “Yes”. His reply was “Why? Spread betting is tax free”, the reply was “Would you like it if your neighbour was earning more money than you and he was not paying tax?”.

I’ve seen part of the regulations regarding spread betting posted in a forum and they are cryptic, very cryptic. They are open to interpretation, deliberately so in my opinion. It is up to the tax inspector to interpret these regulations and make a ruling on your tax position. In these hard economic times I will be very surprised if your winnings from spread betting are tax free. That is not to say that small winnings will not be tax free, but there again how big is small?

The main benefit of SB’s is their tax free status, so if this is in question why not move over to a good broker who will give you the prices that you ask for?

 

[Baby Clanger]

Seems appropriate...

A priest dies and is waiting in line at the Pearly Gates. Ahead of him is a guy who's dressed in sunglasses, a loud shirt, leather jacket, and jeans. Saint Peter addresses this guy, "Who are you, so that I may know whether or not to admit you to the Kingdom of Heaven?" The guy replies, "I'm Joe Cohen, forex broker, of Noo Yawk City." Saint Peter consults his list. He smiles and says to the fx broker, "Take this silken robe and golden staff and enter the Kingdom of Heaven" The forex broker goes into Heaven with his robe and staff, and it's the priest's turn.

He stands erect and booms out, "I am Joseph Snow, pastor of Saint Mary's for the last forty-three years." Saint Peter consults his list. He says to the minister, "Take this cotton robe and wooden staff and enter the Kingdom of Heaven." "Just a minute," says the priest. "That man was a fx broker -- he gets a silken robe and golden staff but I, a priest, only get a cotton robe and wooden staff? How can this be?" "Up here, we work by results," says Saint Peter. "While you preached, people slept; his clients, they prayed."

 

[alan5616]

MMMmmm……a pint of London Pride and a large juicy kebab on a Friday night, nothing better to get the juices flowing, so lets cut to the chase…is spread betting tax free or not?

Has anybody heard of or know of someone whose is earning a good living as a trader, who has declared their winnings to the taxman, is using a SB company and is not paying tax?

I’ve read dozens of pages in dozens of forums dedicated to this subject and no one has ever said yes. I know in this country it’s a private matter but that doesn’t stop someone from posting an anonymous answer.

The closest I’ve come to is when someone rang up his local tax office and ask the question “Will I have to pay tax on my spread betting winnings?”. The answer was “Yes”. His reply was “Why? Spread betting is tax free”, the reply was “Would you like it if your neighbour was earning more money than you and he was not paying tax?”.

I’ve seen part of the regulations regarding spread betting posted in a forum and they are cryptic, very cryptic. They are open to interpretation, deliberately so in my opinion. It is up to the tax inspector to interpret these regulations and make a ruling on your tax position. In these hard economic times I will be very surprised if your winnings from spread betting are tax free. That is not to say that small winnings will not be tax free, but there again how big is small?

The main benefit of SB’s is their tax free status, so if this is in question why not move over to a good broker who will give you the prices that you ask for?

The best answer I can give you is that this is a really grey area. It depends whether you are trading full or part time. Let me explain further.

It is dependent on your local tax office's view of your spread betting activity. I know it sounds crazy and, in all honesty, it is. If you are making money, from trading full time, then your local tax inspector can treat this as your main source of income. Your profits would not be treated as Capital Gains but, as profits generated from speculating on whichever market you're trading on. Therefore, they are subject to income tax.

This is, almost, an identical scenario to that of a professional horse race bettor. There is no tax payable on stake or winnings, any more. However, if your sole source of income is the profit from bets on racing, the tax man would want to know how you are supporting yourself and could slap an assessment on you.

This whole area of profits from betting (spread or other) is a minefield. Accountants can't agree amongst themselves and neither can HMRC offices.

 

[Baby Clanger]

The best answer I can give you is that this is a really grey area. It depends whether you are trading full or part time. Let me explain further.

It is dependent on your local tax office's view of your spread betting activity. I know it sounds crazy and, in all honesty, it is. If you are making money, from trading full time, then your local tax inspector can treat this as your main source of income. Your profits would not be treated as Capital Gains but, as profits generated from speculating on whichever market you're trading on. Therefore, they are subject to income tax.

This is, almost, an identical scenario to that of a professional horse race bettor. There is no tax payable on stake or winnings, any more. However, if your sole source of income is the profit from bets on racing, the tax man would want to know how you are supporting yourself and could slap an assessment on you.

This whole area of profits from betting (spread or other) is a minefield. Accountants can't agree amongst themselves and neither can HMRC offices.

Cheers alan5616, that’s the best and most sensible explanation I've seen.

 

[pineappleman]

Cheers alan5616, that’s the best and most sensible explanation I've seen.

Although....

a). if this happened to me I would see them in court. No way would I hand over tax free winning to the taxman without a fight in court and then an appeal if I lost. Think about it, if you can be taxed on tax free winnings then it's good bye spread bet industry forever, hello regular broker. I cannot believe that SB industry serve no purpose after all these years so the tax free thing must stand surely in a court of law.

b). if you are worried, go stack shelves at weekends in Tesco. That's your regular income. Anything else is therefore tax free gambling winnings.

 

[pineappleman]

The closest I’ve come to is when someone rang up his local tax office and ask the question “Will I have to pay tax on my spread betting winnings?”. The answer was “Yes”. His reply was “Why? Spread betting is tax free”, the reply was “Would you like it if your neighbour was earning more money than you and he was not paying tax?”.

I've heard this story too and it makes my blood boil.

My answer would be:

"Yes I really WOULD like it coz the guy next door is obviously clever, a winner, a doer, not a dreamer and isn't stuck in a f**king 9-5 rut like you Mr Tax Office Worker earning 20k a year so yes I would not only like it I would fall down at his feet and beg him to tell me how I can do it... good luck to anyone who gets ahead in life by beating the system you f**king government puppet!"

GRRRRRRR

The f**king nerve of the tax office!!!

My hard earned tax only goes to pay for the work-shy losers of Britain and fake handicap benefit claimers anyway!!!

 

[alan5616]

Although....

a). if this happened to me I would see them in court. No way would I hand over tax free winning to the taxman without a fight in court and then an appeal if I lost. Think about it, if you can be taxed on tax free winnings then it's good bye spread bet industry forever, hello regular broker. I cannot believe that SB industry serve no purpose after all these years so the tax free thing must stand surely in a court of law.

b). if you are worried, go stack shelves at weekends in Tesco. That's your regular income. Anything else is therefore tax free gambling winnings.

Now you can see why this is such a grey area. Let's assume that you earned £50, at the weekend, stacking shelves in Tesco but, traded 12 hours a day during the normal working week. Your profits, from trading, amounted to approximately £5,000 per week and you made 10 trades each day; what would HMRC consider to be your primary occupation and income source? The shelf stacking in Tesco's? Unlikely, I think.

 

[Ross Spur]

But winnings from gambling isn't 'income' in HMRC terms. The tax has already been paid by the SB, so Her Maj can't take it twice. Do Lottery winners pay tax on their millions? Victoria Coren has made huge sums playing poker and often spouts off in national newspapers about it being tax-free.

 

[alan5616]

But winnings from gambling isn't 'income' in HMRC terms. The tax has already been paid by the SB, so Her Maj can't take it twice. Do Lottery winners pay tax on their millions? Victoria Coren has made huge sums playing poker and often spouts off in national newspapers about it being tax-free.

I suggest you do some proper research before stating what HMRC or The Treasury can or cannot do. Your assumptions on taxable income are incorrect and suggest you re-read what I wrote previously. We are taxed twice in many areas of our lives.

People pay tax on their salary. If they save some of that net income and put it in a deposit account, that pays interest, this interest is taxed also. Is the interest, earned on their deposit, their sole source of income? No, it isn't. There are many other examples that I won't get involved in here.

Lottery winners do not pay tax on their winnings because it's a one off. I don't know what the tax arrangement for Camelot is but, I would hazard a guess that their charitable donations would be a key part of this. Vicky Coren does not depend on playing poker as her sole source of income. She is a successful author and journalist. Poker is a profitable sideline for her.

As a retired accountant, I have come across many controversial aspects of tax law. These controversies, and differences of opinion, keep taxation specialists in business.

 

[Ross Spur]

I suggest you do some proper research before stating what HMRC or The Treasury can or cannot do. Your assumptions on taxable income are incorrect and suggest you re-read what I wrote previously. We are taxed twice in many areas of our lives.

People pay tax on their salary. If they save some of that net income and put it in a deposit account, that pays interest, this interest is taxed also. Is the interest, earned on their deposit, their sole source of income? No, it isn't. There are many other examples that I won't get involved in here.

Lottery winners do not pay tax on their winnings because it's a one off. I don't know what the tax arrangement for Camelot is but, I would hazard a guess that their charitable donations would be a key part of this. Vicky Coren does not depend on playing poker as her sole source of income. She is a successful author and journalist. Poker is a profitable sideline for her.

As a retired accountant, I have come across many controversial aspects of tax law. These controversies, and differences of opinion, keep taxation specialists in business.

I realise that you often pay tax on tax, but you don't pay the same tax twice. If SB gambling profits were taxable, then there's been some very misleading info around for thirty-odd years, and HMRC would surely have stamped on someone's toes by now (and note that I didn't even mention the Treasury).

Following your argument that a lottery win isn't taxable because it's a one-off, what about if someone puts a single large bet on a rolling contract, leaves it running for ten years, then closes for £1m?

And Ms Coren may be a successful author, but I doubt the Grauniad pays £500,000 for one of her columns!

 

[alan5616]

I realise that you often pay tax on tax, but you don't pay the same tax twice. If SB gambling profits were taxable, then there's been some very misleading info around for thirty-odd years, and HMRC would surely have stamped on someone's toes by now (and note that I didn't even mention the Treasury).

Following your argument that a lottery win isn't taxable because it's a one-off, what about if someone puts a single large bet on a rolling contract, leaves it running for ten years, then closes for £1m?

And Ms Coren may be a successful author, but I doubt the Grauniad pays £500,000 for one of her columns!

Which part of main source of income don't you understand? If you doubt that what I'm saying is true then speak with your accountant and/or your local HMRC office. I gave members, here, what I consider to be good and accurate advice, in good faith. I'm not going to get into a war of words with you because you disagree with me. End of discussion.

 

[heatonfan]

alan is right.

absolute exemption from CGT and Stamp duty, but a potentially grey area where income is concerned. If spread betting profits constitute subsistence income, then it could be an issue. No clear cut answer. HMRC contains the same number of unambitious clock watchers as any other govt department (that is when they are not on the sick) and most tax offices will be unable to give a sensible answer. You would probably need to be subject to an investigation before your status could be sensibly considered.

Anyway, this is supposed to be about Smart Live Markets (who i think are pretty good), not a badly ill informed tax forum so lets return to that!

I suggest you do some proper research before stating what HMRC or The Treasury can or cannot do. Your assumptions on taxable income are incorrect and suggest you re-read what I wrote previously. We are taxed twice in many areas of our lives.

People pay tax on their salary. If they save some of that net income and put it in a deposit account, that pays interest, this interest is taxed also. Is the interest, earned on their deposit, their sole source of income? No, it isn't. There are many other examples that I won't get involved in here.

Lottery winners do not pay tax on their winnings because it's a one off. I don't know what the tax arrangement for Camelot is but, I would hazard a guess that their charitable donations would be a key part of this. Vicky Coren does not depend on playing poker as her sole source of income. She is a successful author and journalist. Poker is a profitable sideline for her.

As a retired accountant, I have come across many controversial aspects of tax law. These controversies, and differences of opinion, keep taxation specialists in business.

 

[Ross Spur]

Which part of main source of income don't you understand? If you doubt that what I'm saying is true then speak with your accountant and/or your local HMRC office. I gave members, here, what I consider to be good and accurate advice, in good faith. I'm not going to get into a war of words with you because you disagree with me. End of discussion.

Damn, and I was hoping you could advise me what to do when I close the £500 per point long I opened on the Dow when it dipped to 8000 a few years back. Address all future correspondence c/o Bellmarsh Prison. Maybe I'll get Jeffrey Archer's old cell?

 

[alan5616]

Damn, and I was hoping you could advise me what to do when I close the £500 per point long I opened on the Dow when it dipped to 8000 a few years back. Address all future correspondence c/o Bellmarsh Prison. Maybe I'll get Jeffrey Archer's old cell?

 

[pineappleman]

Now you can see why this is such a grey area. Let's assume that you earned £50, at the weekend, stacking shelves in Tesco but, traded 12 hours a day during the normal working week. Your profits, from trading, amounted to approximately £5,000 per week and you made 10 trades each day; what would HMRC consider to be your primary occupation and income source? The shelf stacking in Tesco's? Unlikely, I think.

But hang on hang on hang on.....

Are you saying it's what HMRC "considers" - as in, they "make up their minds" and not follow a strict law about this??? Supposing two member of the HMRC have different views?!!! It's a joke! These people need to stop being jealous at people getting ahead in life by thinking outside the box! Jealously is not a nice trait.

What I mean is: surely there is a law, a blanket law, that covers this. Betting is tax free. Therefore SB should be tax free. If I stacked shelves in Tesco at weekends for £200 a month, that is my steady, non gambling, fully taxable income surely? So surely the law (and no one is above the law remember, not even our wonderul HMRC) states that my winnings through gambling on any bets is tax free, whether horses, football, FTSE or poker.

EDIT: sorry I'm not buying any of this... I seriously think you would win your case in court or even a European court if it had to go that far. If you are doing something (in this case gambling on financial markets) which clearly states in all literature: "profits are tax free in the UK" - which is does on every website/piece of paperwork within the realm of SB - then you have it set in stone as far as I can see and you would have to win this in court. If this wasn't the case, the SB financial industry would not exist as it holds no use to anybody.

 

[magicdogsbrain]

From what I gather it all depends on how you classify your foreign exchange activity....

If you are betting for entertainment then it is tax free (via spread betting account).
If you are investing (and holding trades over weeks) for growth then you are subject to CGT
If you are trading (especially intra day) or speculating then you are subject to income tax.

If you have no job or regular profession - then it would be hard trying to argue that you were betting and not trading. Although you could probably get away with quite a lot of "betting" as long as you also declare some income.

I am hoping that if you do have a day job and also trade forex (with a regular forex broker), then the money you make can be classified as subject to CGT. Even though I 'trade' I am doing it for growth and not for income

 

[alan5616]

But hang on hang on hang on.....

Are you saying it's what HMRC "considers" - as in, they "make up their minds" and not follow a strict law about this??? Supposing two member of the HMRC have different views?!!! It's a joke! These people need to stop being jealous at people getting ahead in life by thinking outside the box! Jealously is not a nice trait.

What I mean is: surely there is a law, a blanket law, that covers this. Betting is tax free. Therefore SB should be tax free. If I stacked shelves in Tesco at weekends for £200 a month, that is my steady, non gambling, fully taxable income surely? So surely the law (and no one is above the law remember, not even our wonderul HMRC) states that my winnings through gambling on any bets is tax free, whether horses, football, FTSE or poker.

EDIT: sorry I'm not buying any of this... I seriously think you would win your case in court or even a European court if it had to go that far. If you are doing something (in this case gambling on financial markets) which clearly states in all literature: "profits are tax free in the UK" - which is does on every website/piece of paperwork within the realm of SB - then you have it set in stone as far as I can see and you would have to win this in court. If this wasn't the case, the SB financial industry would not exist as it holds no use to anybody.

You're missing the point. I'll reiterate.

If HMRC considers that your full time occupation is trading, then regardless of what the SB Cos. say, you may be liable to receive a tax assessment. It will then be up to the individual to prove to HMRC that he/she does not have a tax liability.

Can we put this to bed now? I was reluctant to make my original post on this topic but, thought that I was being helpful. I now wish I had refrained from doing it because this is just the type of argument that has been raging between the Inland Revenue (as it was) and taxation specialists for years.

Go back to discussing SLM, guys, and, in future, I'll keep my mouth shut