Tax

[scose-no-doubt]

I've been saying that for donkeys and getting laughed at. maybe now someone will take heed lol

 

[Ross Spur]

Futex spend tens of thousands on legal and council opinions. Spreadbetting in nearly all circunstances wold not be taxable, but there are situations where other law takes precedence. Its about "professionalism". if gambling, is your profession, you are liable to tax.

Easy enough to claim you have another 'profession', I would have thought?

 

[anley]

Easy enough to claim you have another 'profession', I would have thought?

Yes, very easy but how much do you earn versus what you spend.

For example, say you write a newsletter that brings in £30k salary a year yet your spread betting makes £500k. If you don't spend a penny of the £500k and the taxman comes after you, it's going to be hard for them to win as you can prove you earn £30k and that's what you live on.

But if you spend £100k a year with 70k coming from the spread betting pot, that's a different matter.

I hear all the talk about no-tax but I also know the Taxman and he can be a real prick moving the goalposts as he sees fit.

 

[Hoggums]

You are wrong - there is no tax to be paid - except perhaps some NI class 3 (voluntary) would be advisable.

If a company was to enter a spreadbet then this would be defined as a contract for difference (CFD) and would be taxable as such (CFM50380). A spreadbet by an individual is not. Therefore provided you are not a self employed trader paying class 2 NI contributions or a trader operating through a Ltd you do not have to pay tax. You may also not be liable for tax if you are self employed and conducting your trading through this self employment - but I am not sure of the facts here.

Just declare yourself as retired and your gambling as a hobby.

some snippets from the web...

An organised activity to make profits out of the gambling public will normally amount to trading. Although over time new forms of games of chance have evolved, these principles remain the same. The taxpayer placing a spread bet is not normally carrying on a trade (see BIM22020 for exceptions). The professional gambler is not taxable on the profits, nor does he or she receive tax relief for losses. But, the bookmaker organising the spread bet is taxable on his or her profits.



The section on betting and gambling in HMRC’s Business Income Manual contains the following further guidance:



• What is a bet – BIM22016



• The professional gambler – BIM22017



• Organised activity – BIM22018



• Element of existing trade – BIM22019



• Spread betting – BIM22020



Is an on-line professional gambler still just operating a system by habit or are they trading? Provided that the “pro-punter” is not carrying on an organised activity to make profits out of the gambling public, it is considered this will not amount to trading.


The betting exchanges have produced a number of sophisticated pro-punters who approach their work on a scientific, well-researched basis. This is not “irrational” but the profit is “tax free”. For tax purposes there is no distinction between recreational and non-recreational players.

 

[anley]

Hogg, I hope everyone is wrong that states a pro-punter has no tax to pay. But with the IR you never know.

Plus, governments are now desperate for cash and if it's not nailed down they'll want their share and SB profits are hard to nail down

 

[scose-no-doubt]

Hoggums, are you really going to place web research over the opinon of Futex solicitors?

 

[Shakone]

They don't necessarily conflict scose. If spreadbetting you don't pay tax. If you have a profession you might have to pay tax. Spreadbetting therefore has to be viewed as a profession to tax it, rather than gambling which remains tax-free. Current case law precedent seems to be that gambling winnings do not constitute a profession, even if they are your sole or main income.Hoggums posted links to these. Now the law could change, but then there would be a new precedent, and you should be able to find this somewhere and as far as the info we have, there has not been such a precedent, there is no person who has been taxed on spreadbetting winnings. Therefore you can't be taxed on it.

 

[scose-no-doubt]

S'not what futex solicitors think.
I'd hazard that professional quals/experience or something would cinch it.

 

[Parky]

Thanks for the Legal ruling but I cannot see how a case concerning Horse racing would hold water with regards to Derivatives trading, that is tenuous at best. Liquidity providers to the markets are very different to what is obvious gambling with regards to Horse racing. The crux is if you buy an Bund are you gambling or not, whilst you could put up constructive arguments wither way HMRC is not going to stand by whilst hundreds of traders, who were paying taxes last year and on previous years, cloak their trading into a manufactured spread bet for the sole purpose of avoiding paying tax. That is what it boils down too and the companies offering this have their backsides covered by disclaimers saying if they are wrong you are liable and the poor trader could get hammered for years of taxes if their trading is not deemed to be gambling.
It is very simple, if these companies are sure they are right, remove the disclaimer.

 

[Shakone]

S'not what futex solicitors think.
I'd hazard that professional quals/experience or something would cinch it.

If someone were to spreadbet from a FUTEX office, with FUTEX money, and then receive a profit split, then that would be a profession, and taxable.

 

[scose-no-doubt]

You're assuming that's the view the solicitors were assessing. We don't know that to be the case.

 

[Shakone]

You're assuming that's the view the solicitors were assessing. We don't know that to be the case.

I'm not assuming anything. I'm explaining that the fact a profession is taxable doesn't necesssarily imply that a spreadbettors winnings are taxable, even if it's their sole income. If I win the lottery and that's my only income, I wouldn't have to pay tax on it. It's still gambling. It's not a profession. And since case law suggests gambling is not a profession and it is not taxable, then unless you can find someone who does have to pay tax on their winnings, the point is moot.

 

[ZEN archer]

Thanks for the Legal ruling but I cannot see how a case concerning Horse racing would hold water with regards to Derivatives trading, that is tenuous at best.

'The UK tax authorities designate financial spread betting as gambling and not investing, despite the fact that its regulated as a financial product by the FSA in the UK.'

I don't think gambling is considered taxable in the UK. If that was the case any losses would be deductible which would result in less tax collected by the tax authorities.

 

[Ross Spur]

Would anyone who's ever had to pay tax on SB winnings please identify themselves?

 

[scose-no-doubt]

would anyone who makes their sole income from spread betting please identify themselves?

 

[dazzer_fx]

Also I've been told by an Accountant today that you can not use
your CGT allowance against day trading profits (broker not sb) as
it's considered a business activity and not investment.

Has anybody heard this before?

 

[Shakone]

Also I've been told by an Accountant today that you can not use
your CGT allowance against day trading profits (broker not sb) as
it's considered a business activity and not investment.

Has anybody heard this before?

Taxes in the Uk, all very messy. The board should really have some clear cut info on these things, but I guess that's difficult given the Inland Revenue's tendency to be vague at times, and overly complicated at other times.

 

[scose-no-doubt]

Also I've been told by an Accountant today that you can not use
your CGT allowance against day trading profits (broker not sb) as
it's considered a business activity and not investment.

Has anybody heard this before?

Forex is CGT.

If you trade in and out of shares within a certain timeframe (2/3 weeks rings a bell) then no CG allowance as it's income.

 

[jungerns]

Having spent ages going around in circles with the tax office (why dont local tax offices deal with local people !) they confirmed to myself this morning that if Spread Betting is your sole source of income, it is indeed taxable.

Now someone has already made the point that if you speak to 5 different officers you'll get 5 different answers, but this was very clear advice, and reading between the lines the officer spoken to had clearly recently had reason to investigate said subject.

Have written to my own accountant this morning subsequently for clarification.

 

[scose-no-doubt]

Someone will come along and tell you that HMRC are wrong soon.