Are all my spread bet profits tax free?

Strugglingtrader

Active member
147 9
Hi

I was let go just before Christmas (scum bag of a boss) and decided to spread bet.

I've been in an out of trading for the last 15 years, as a sales trader, hedge fund and a day trader at a US prop firm. That was all about 15 years ago and for the last 15 years I've just been a sales guy.

When I was let go at x-mas I had no where to go, so I started spread betting. It's going alright now and I'm wondering if I will have to pay tax if it keeps going well (£5-10k per month on total capital of £10k) or is it all just tax free?

Thank you in advance for any guidance and advice and all the best in trading, never forget it's an art not a science.
 

tomorton

Legendary member
8,143 1,227
With these returns I can't believe you're a struggling trader Strugglingtrader, well done.

Profits from spreadbetting are not taxable. However, I have heard of seriously profitable traders trying to convince HMRC to accept their profits as taxable income - in your case it could be worth looking at.
 

leemo

Member
57 6
With these returns I can't believe you're a struggling trader Strugglingtrader, well done.

Profits from spreadbetting are not taxable. However, I have heard of seriously profitable traders trying to convince HMRC to accept their profits as taxable income - in your case it could be worth looking at.
Why would anyone want to pay tax on tax free income?
 

gle101

Veteren member
3,717 84
Sorry to hear about you job. Amazing result I must say, this in references to your profit contra your capital. Anyway, I want go into money management and such as you seems to have been around trading for quite some time. As I understand it, in the UK if your sole source of income comes from SB it is taxable. But I wonder how many professional SB traders reports to the tax authorities?
 

gle101

Veteren member
3,717 84
With these returns I can't believe you're a struggling trader Strugglingtrader, well done.
With that kind of risk taking I am quite sure he will be struggeling quite soon.:) Ok, I had to say it after all.
 

NVP

Legendary member
37,540 1,990
Hi

I was let go just before Christmas (scum bag of a boss) and decided to spread bet.

I've been in an out of trading for the last 15 years, as a sales trader, hedge fund and a day trader at a US prop firm. That was all about 15 years ago and for the last 15 years I've just been a sales guy.

When I was let go at x-mas I had no where to go, so I started spread betting. It's going alright now and I'm wondering if I will have to pay tax if it keeps going well (£5-10k per month on total capital of £10k) or is it all just tax free?

Thank you in advance for any guidance and advice and all the best in trading, never forget it's an art not a science.

are those returns actual ?...........

although I admire people planning ahead - personally I say don't worry about paying tax on profits until you are kicking regular butt ...........life has a habit of not turning out as you hope ...worry about making regular money first on a decent platform ......

good luck

N
 

gle101

Veteren member
3,717 84
are those returns actual ?...........

although I admire people planning ahead - personally I say don't worry about paying tax on profits until you are kicking regular butt ...........life has a habit of not turning out as you hope ...worry about making regular money first on a decent platform ......

good luck

N
Yes maybe he left out by misstake, one zero on the capital part.
 

Splitlink

Legendary member
10,850 1,233
ime. As I understand it, in the UK if your sole source of income comes from SB it is taxable.

I've heard that, too. I believe that so many traders would declare tax losses against their other income that that is the reason that it is not taxed. It's a hot potato for the government.

In Spain, I do not have that problem. Gambling profits carry a 20% tax. No ifs or buts. :D
 

Strugglingtrader

Active member
147 9
Thank you all for your comments. I just get worried as I don't have another job right now and as it is my only source of income I'm just wondering how I can protect myself. I do hope it stays this way but I know I need to have the heart to make it back if it doesn't stay this way.

Just want to clarify that I'm a "Strugglingtrader" because I know I'm only one bad trade away from humility. I've had three tough trades in the last couple of months which I was able to "wiggle" my way out of but I am still "struggling" to manage the risk, hopefully I'll get there as I don't have anything else to fall back on.
 

Strugglingtrader

Active member
147 9
With these returns I can't believe you're a struggling trader Strugglingtrader, well done.

Profits from spreadbetting are not taxable. However, I have heard of seriously profitable traders trying to convince HMRC to accept their profits as taxable income - in your case it could be worth looking at.


Thanks for your kind words. I know as soon as I get too confident I will get a reality check, but could I ask you why would seriously profitable traders try to convince HMRC to accept their profits as taxable income?
 

Strugglingtrader

Active member
147 9
Sorry to hear about you job. Amazing result I must say, this in references to your profit contra your capital. Anyway, I want go into money management and such as you seems to have been around trading for quite some time. As I understand it, in the UK if your sole source of income comes from SB it is taxable. But I wonder how many professional SB traders reports to the tax authorities?

Many thanks for your kind words. It is indeed difficult to understand why things happen, but hopefully they lead to better things.

I have been day dreaming sometimes that if things stay this way I would like to manage money as I have been in investment management since 1996, but I ended my dream by concluding that I can just manage my own money without the regulatory headaches. I don't feel a need to report to the tax authorities if it isn't required, I'm just wondering if an income of £20,000 a year from other sources (BTL) will be accepted by the tax authorities against an income of potentially £200k from spread trading?
 

Strugglingtrader

Active member
147 9
I've heard that, too. I believe that so many traders would declare tax losses against their other income that that is the reason that it is not taxed. It's a hot potato for the government.

In Spain, I do not have that problem. Gambling profits carry a 20% tax. No ifs or buts. :D

Thank you for commenting on my post. Could I ask you why you would be prepared to pay 20% the government? I'm probably getting ahead of myself (no doubt), but if the trading goes well and you do fall within the authorities interpretation of spread betting profit being a taxable income, would it not be better to move to another country?

I know this is only worth considering when the profits are of some worth, but just wondering.
 

Strugglingtrader

Active member
147 9
With that kind of risk taking I am quite sure he will be struggeling quite soon.:) Ok, I had to say it after all.

:D Nice one mate.

My heart is in my throat most of the time and I'm constantly marking the exit door, but my goal is to do this consistently till Easter, when I hope to add a zero on the capital and trade size.

But that one bad trade to humility is always correcting.
 

Forexmospherian

Legendary member
39,928 3,300
Many thanks for your kind words. It is indeed difficult to understand why things happen, but hopefully they lead to better things.

I have been day dreaming sometimes that if things stay this way I would like to manage money as I have been in investment management since 1996, but I ended my dream by concluding that I can just manage my own money without the regulatory headaches. I don't feel a need to report to the tax authorities if it isn't required, I'm just wondering if an income of £20,000 a year from other sources (BTL) will be accepted by the tax authorities against an income of potentially £200k from spread trading?

Hi ST

If you do have an income and a job that takes up most of your time - say over 20 hrs a week and whether you earn say £13K per annum or £50k p a - and you pay tax on it - and its not trading - then your spread betting on trading is tax free

I got in trouble when i tried to place more of my profits through spread betting - whilst still paying tax on other income that was via FX trading - but was not via a spread betting company.

Unfortunately I was already in the black books of the old IR and was therefore regularly investigated ever approx 5 yrs going back from my first investigation in the mid 80's when with penalties and interest they settled for just under £30k after initially claiming I had underpaid nearly a 6 figure amount.

As long as you are not already on their hit list - and already paying your tax and not living in a £2 million house and driving a Bugatti - you should be OK.

If spread betting is your only income/ work and you make over say £12 / 15k per annum per year from it - then by rights you are a professional trader / gambler and will be taxed on it.

With regards to your returns - up to 50%+ per month can be earned by just using stake size under say 3% max of your capital - that's if you an experienced intraday multi trader with years and 1000's of live trades behind you.

If you are using stake sizes over say 7% -say 10 to 15% of your capital for every trade then you are riding on luck - and maybe an accident is awaiting to happen.

OK you might make 3 or even 5 months - but very much doubt on say 10%+ stake size your luck will last 6 months or a couple of years etc - as a bad run of consecutive losses will - or could ruin the account completely.

By the way - is your story true ? - or is it an old member on another "wind up"

Good Trading

Regards

F
 
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barjon

Legendary member
10,604 1,742
Hi

I was let go just before Christmas (scum bag of a boss) and decided to spread bet.

I've been in an out of trading for the last 15 years, as a sales trader, hedge fund and a day trader at a US prop firm. That was all about 15 years ago and for the last 15 years I've just been a sales guy.

When I was let go at x-mas I had no where to go, so I started spread betting. It's going alright now and I'm wondering if I will have to pay tax if it keeps going well (£5-10k per month on total capital of £10k) or is it all just tax free?

Thank you in advance for any guidance and advice and all the best in trading, never forget it's an art not a science.

At the moment it is all tax free whether or not it is your sole source of income. The only snag is whether it is associated with a related activity - such as selling trading tips, for example - when the spread betting may be deemed to be part of an overall business activity and thus taxable.

Even then it's unlikely, unless anyone is really coining it, because HMRC gain much more from the betting tax applied to SB companies than they would gain from their clients if they taxed any income derived when they'd have to allow losses to count against taxable income.
 
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