Are all my spread bet profits tax free?

[mike.]

Hi CV

- but if its just say 2 or 3% making over say £50K or £100k+pa and not paying any tax - well they are the ones who will be chased and cornered


F

Just sticking the oar in here F, because its sunday and im bored.

I think if you were one of the fore-mentioned traders above and contact hmrc to tell them what you have made and offer to pay the relevant tax then im sure they will find a clause to gladly accept it.

But as for chasing you, they would have to prove that spread-betting does not come under uk gambling laws. i.e. tax free.. surely they would have done it by now through a test case.

 

[timsk]

Hi FoMo,

. . . I think you are not following what I have already said and trying to get a "yes or no" answer - when it fact its NOT black or white.

If it's not black 'n white, how come the spread betting companies are allowed to present it as such and go unchallenged - every last one of them - year after year, day after day? If, as you claim, they cover themselves in their 'small print', kindly produce the evidence to support your claim with a link. Can you do that? My bet is that you can't - can you!

. I repeat - spreadbetting is tax free for maybe 90 -95% of all traders.

Please tell me which side of this divide (I - not you) fall in? Can you do that? My bet is that you can't - can you!

However - it is not tax free for professional type gamblers who are full time and are not paying any tax from other revenues they earn outside trading.

So, please tell me, how much do I need to earn "from other revenues outside trading" to avoid paying tax? Please provide a link to a HMRC policy document that gives exact figures. Can you do that? My bet is that you can't - can you!

I will also repeat you have no need to worry if you have a clean tax history - are not a full time spread better and pay tax to the HMRC from other sources of revenue.

What's a 'clean' tax history? If you mean that the only people who need to worry about paying tax on spread betting profits are those who have evaded paying tax in the past and, in so doing, set off alarm bells with the officials at HMRC - then I have no sympathy with them. That's got naff all to do with the basic points being discussed here.

I hope that clarifies it more

Unfortunately FoMo, no it doesn't. As usual with your posts, they appear to me to be about muddying the waters rather than clarifying them. About misleading members rather than informing them. About your own agenda playing games at the expense of the wider membership, rather than talking facts, backed up by hard evidence which will support, educate and help members move forward in their trading.

If I'm, wring - kindly address the points made in this and previous posts by providing hard evidence in the form of links to HRMC, spread betting firms and copies of your own correspondence etc. Thus far, you've provided zilch - as in nada, nothing, other than bluster and hot air.
Tim.

 

[morgan_edge]

I'm a multi-millionaire

 

[counter_violent]

I'm a multi-millionaire

Is that because you didn't pay tax on your spread betting profits ?

 

[Splitlink]

Birmingham Tax office had me in 2008 / 2009

So I better sue my accountant and lawyer then ;-))

Which proves my point, if you can get investigated, what chance do we, poor, ignorant creatures, have?

Declare your filthy lucre, lads, and be done with it.

 

[Forexmospherian]

Just sticking the oar in here F, because its sunday and im bored.

I think if you were one of the fore-mentioned traders above and contact hmrc to tell them what you have made and offer to pay the relevant tax then im sure they will find a clause to gladly accept it.

But as for chasing you, they would have to prove that spread-betting does not come under uk gambling laws. i.e. tax free.. surely they would have done it by now through a test case.

Hi Mike

This is what many people do not full understand when dealing with the HMRC.

For example - if you are arrested for some criminal offence - you remain innocent until you are proved guilty - ie there must be sufficient evidence that you are guilty etc etc

If you are investigated by the HMRC - for whatever reason - whether your name came out the computer or because you have advertised something on ebay or you claim to be self employed contractor etc etc - then - you are guilty of the offence - until YOU can prove you are innocent.

The HMRC have more powers then the Police. Not knowing something - ie ignorance of tax avoidance or tax evasion cannot be used for your defence

Yes you can show the adverts and the letter from your spreadbetting company saying that its tax free - that's fine - the HMRC will point out that 90% of all people at working age are in work and are paying income tax etc - and that it applies to them - but if you are earning more than the tax free threshold and don't pay any type of income tax that year then you are one of the few who could face paying a penalty on your last 6 years of your income.

In my own case - i would have never been found out if I had not already been on the "watch list" as I had been caught during my business life paying for holidays - christmas presents / parties and cars and mobile phone contracts via my company funds during the late 1980's. The penalty and interest I had to pay was more than the actual back tax - and to make it worse the caught me again 5 yrs later . I had a Porsche 911 as my company car and claimed tax relief on travelling more than 18K business miles in the year. Because they had the time and had not found me doing anything else incorrectly they were able to prove - that if I deducted my weekend use and also the travel from home to work - instead of doing something like 21k business miles per annum - I only actually did 16 /17k - and so was not eligible for that relief .

All this leaves you open to be continually investigated every 5 years or so - all the way up until you die.

As long as you never end up on the "list" - I am sure you will be OK and then the odds of you being found out and investigated are fairly remote - from what I gather.

Nowadays - I pay all what I have to pay - and not a penny more.

Remember - crime does not pay - but you probably have more chance of robbing a Bank and getting away with it - then getting away from the HMRC once they have got you on something ( That's a joke - but thats how it feels ;-) )

Regards

F

 

[barjon]

Hi Mike

This is what many people do not full understand when dealing with the HMRC.

For example - if you are arrested for some criminal offence - you remain innocent until you are proved guilty - ie there must be sufficient evidence that you are guilty etc etc

If you are investigated by the HMRC - for whatever reason - whether your name came out the computer or because you have advertised something on ebay or you claim to be self employed contractor etc etc - then - you are guilty of the offence - until YOU can prove you are innocent.

The HMRC have more powers then the Police. Not knowing something - ie ignorance of tax avoidance or tax evasion cannot be used for your defence

Yes you can show the adverts and the letter from your spreadbetting company saying that its tax free - that's fine - the HMRC will point out that 90% of all people at working age are in work and are paying income tax etc - and that it applies to them - but if you are earning more than the tax free threshold and don't pay any type of income tax that year then you are one of the few who could face paying a penalty on your last 6 years of your income.

In my own case - i would have never been found out if I had not already been on the "watch list" as I had been caught during my business life paying for holidays - christmas presents / parties and cars and mobile phone contracts via my company funds during the late 1980's. The penalty and interest I had to pay was more than the actual back tax - and to make it worse the caught me again 5 yrs later . I had a Porsche 911 as my company car and claimed tax relief on travelling more than 18K business miles in the year. Because they had the time and had not found me doing anything else incorrectly they were able to prove - that if I deducted my weekend use and also the travel from home to work - instead of doing something like 21k business miles per annum - I only actually did 16 /17k - and so was not eligible for that relief .

All this leaves you open to be continually investigated every 5 years or so - all the way up until you die.

As long as you never end up on the "list" - I am sure you will be OK and then the odds of you being found out and investigated are fairly remote - from what I gather.

Nowadays - I pay all what I have to pay - and not a penny more.

Remember - crime does not pay - but you probably have more chance of robbing a Bank and getting away with it - then getting away from the HMRC once they have got you on something ( That's a joke - but thats how it feels ;-) )

Regards

F

Jeepers creepers, you ought to come with a health warning FXMO

 

[malaguti]

In my own case - i would have never been found out if I had not already been on the "watch list" as I had been caught during my business life paying for holidays - christmas presents / parties and cars and mobile phone contracts via my company funds during the late 1980's.

F

there is case law regarding the veil of incorporation dating back to 1897
there is no such case law against spreadbetting
it doesn't matter how many times you are investigated, they can't make things up, unlike on these forums

 

[Forexmospherian]

Hi FoMo,

If it's not black 'n white, how come the spread betting companies are allowed to present it as such and go unchallenged - every last one of them - year after year, day after day? If, as you claim, they cover themselves in their 'small print', kindly produce the evidence to support your claim with a link. Can you do that? My bet is that you can't - can you!


Please tell me which side of this divide (I - not you) fall in? Can you do that? My bet is that you can't - can you!


So, please tell me, how much do I need to earn "from other revenues outside trading" to avoid paying tax? Please provide a link to a HMRC policy document that gives exact figures. Can you do that? My bet is that you can't - can you!


What's a 'clean' tax history? If you mean that the only people who need to worry about paying tax on spread betting profits are those who have evaded paying tax in the past and, in so doing, set off alarm bells with the officials at HMRC - then I have no sympathy with them. That's got naff all to do with the basic points being discussed here.


Unfortunately FoMo, no it doesn't. As usual with your posts, they appear to me to be about muddying the waters rather than clarifying them. About misleading members rather than informing them. About your own agenda playing games at the expense of the wider membership, rather than talking facts, backed up by hard evidence which will support, educate and help members move forward in their trading.

If I'm, wring - kindly address the points made in this and previous posts by providing hard evidence in the form of links to HRMC, spread betting firms and copies of your own correspondence etc. Thus far, you've provided zilch - as in nada, nothing, other than bluster and hot air.
Tim.

Hi Tim

Well if you chose not to believe what I am saying that is your prerogative.

Why dont you open it up to all the spread betting companies here to answer your question.

I know the answer - and if you do not believe it - lets get the spread betting companies answer your question that ALL spreadbetters are exempt from paying tax on their profit?

I have provided is it 2 or 3 links showing that it is not a "black and white" scenario - something you are finding difficult to except ?- so if you don't want to believe them as well - that again is your prerogative.

With regards to me showing you my own correspondence back in 2008 / 2009 - that is private and confidential - but even then the HMRC are too clever to have said this in actual writing.

I have also explained in detail why I did not challenge - and instead accept the penalties imposed.

Cannot do any more Tim - although if you want I will try and find more clarification from KPMG

Regards

F

 

[Forexmospherian]

Here's someone with far more credibility than I have on this forum - explaining what he did.

Now if I remember correctly Random had also worked in a large accountancy group and his Father was also a Chartered Accountant - although I do not know if he had any expertise in Tax Laws

See what he did below. ;-)

Sorry I was, of course, being sarcastic. Taxes and their policy of enforcement are set by parliament and then court decisions on the intent of the law clarify confusion or disagreement. HMRC do not create laws, they collect taxes the exchequer believes it is owed.

I agreed to settle tax on my own spread betting income with the commissioners when I became a full time self employed trader, but for that year and subsequent years only. I had previously declared all SB income by White Space Note and was not required to settle on those amounts as I was employed outside of trading, though I had worked for Mitsubishi UFJ prior to that, when I was.

If spread betting income is your only income then you are carrying on a trade, distinct from simply being presented a casual opportunity to trade should you wish by way of an occasional spread bet, whether that casual spread is on horses, golf, financial derivatives or American Football. This is the basis of the argument that people with other careers can use SB'ing tax free. It is a fair position.

BIM22020 - Trade: Exceptions & alternatives: Betting and gambling - spread betting - the court never ruled directly on financial spread betting cases because so few such cases exist. There are so few of these winning individuals since they insist on paying such a huge variable spread and enjoy having large latency feeds and therefore there is little profit in pursuing them and practically none of them make enough to go to court to press the argument. Any tax lawyer who isn't employed by Dodgy [email protected] will explain that this language clearly applies to SB 'traders' also. If you are REALLY making a lot of money and are worried then you can get someone at Linklaters or PwC (depending on the type of advice...) to clarify this for you, rather than looking on a forum board.

The big four will always tax traders etc on spread betting income if they carry on a trade that is related to financial derivatives or high wealth individuals who only trade. Complexities arise when trading forms a smaller part of your portfolio, but may still produce significant income.

It is always free from CGT as no tax is levied in general language on capital gains. Income tax is levied in general language on non hobbyists pursuing a profit from activities.

Note that this is basically irrelevant to people on the boards and they need not worry. Sustained income from this is extremely unlikely to happen to you. I wouldn't even consider worrying about it until you had three successful years at least and even then... HMRC will not cripple you with discovery fines either due to the fact that ambiguity remains.

Good luck.

 

[timsk]

Jeepers creepers, you ought to come with a health warning FXMO

Agreed Jon. I'm seriously considering putting forward an idea along these lines to Sharky and the Mods for their consideration.


Hi FoMo,

Well if you chose not to believe what I am saying that is your prerogative.

Well, at least we're agreed on something! If you want me (and the wider membership) to even begin to entertain the idea that what you claim could possibly hold water - then answer the very clear requests for real evidence that I've asked for in previous posts. You conveniently ignore all such requests. I'll leave it to the combined common sense of the membership as to why that might be.

Why dont you open it up to all the spread betting companies here to answer your question.

The forum is completely open. Representatives of spread betting companies are free to post at any time. That includes their competitors who aren't able to offer tax free trading. Indeed, I welcome all their contributions. If what you say is true, surely other brokers would be the first to point out that the SB firms are making false claims? I don't know of a single one - do you? That the SB firms haven't posted here is - I assume - because their position is crystal clear and they have nothing more to add.

I know the answer - and if you do not believe it - lets get the spread betting companies answer your question that ALL spreadbetters are exempt from paying tax on their profit?

You know the answer to everything FoMo. At least, that's what you'd like us all to believe and therein lies the problem, IMO. As I've made clear already, the position of the spread betting companies is clear. You are the one that's calling it into question and, as such, the onus is on you to provide evidence that they are making false claims and misleading prospective and existing clients by stating that profits made via spread betting are tax free. Step up to the plate and provide your evidence or back down. One or the other - your choice.

I have provided is it 2 or 3 links showing that it is not a "black and white" scenario - something you are finding difficult to except ?- so if you don't want to believe them as well - that again is your prerogative.

Your links show nothing of the kind. The ones I've seen are just to other sites offering opinion and conjecture - no hard evidence at all. It's very simple FoMo - you provide the evidence from HMRC that some spread betting profits are taxable or that spread betting companies say one thing on the front pages of their websites and then say something different in their small print - and I'll start to take your claims seriously. Until you do that, your comments are just unhelpful, misleading bluster. And that's being kind!

With regards to me showing you my own correspondence back in 2008 / 2009 - that is private and confidential - but even then the HMRC are too clever to have said this in actual writing.

I have also explained in detail why I did not challenge - and instead accept the penalties imposed.

I've you don't want to produce the evidence regarding your own tax affairs - that's fine - I've no problem with that. By the same token, you can't expect us to believe your account of the situation and just accept what you say. So, either leave your personal dealings with HMRC out of the discussion altogether - or provide the evidence to support your claims. One or the other. Again, your choice.

Cannot do any more Tim - although if you want I will try and find more clarification from KPMG

On the contray, you can do a whole lot more. One single piece of evidence that I and others have asked for repeatedly would be a great starting point. If you fail to do that, all subscribers to this thread will surely conclude that I - and just about all other contributors to the thread - are right about you and that your argument has more holes in it than a very leaky sieve.
Tim.

 

[counter_violent]

On the contray, you can do a whole lot more. One single piece of evidence that I and others have asked for repeatedly would be a great starting point. If you fail to do that, all subscribers to this thread will surely conclude that I - and just about all other contributors to the thread - are right about you and that your argument has more holes in it than a very leaky sieve.
Tim.

Just like the trading threads then !

 

[morgan_edge]

Just like the trading threads then !

(Talking of trading, I want to see you post more on the live call thread.
Jessie_trader is in danger of taking your title of who is the best trader on the forum!)

 

[counter_violent]

(Talking of trading, I want to see you post more on the live call thread.
Jessie_trader is in danger of taking your title of who is the best trader on the forum!)

Sorry, I'm a bit busy ATM...so yall just carry on without me.

 

[Strugglingtrader]

Dear All, there a lot opinions and some facts that have been submitted on this thread. While I appreciate all the feedback I've come to the conclusion that Spread betting profits are indeed tax free at the moment, but as soon as that begins to change any successful spread better is likely to move out of the UK as it is a very mobile function.
Best of luck in the meantime, we all need it.

 

[Forexmospherian]

I am delighted Tim wants this subject bringing to a "head" or an "end"

I appreciate there are many members here who have no respect for me and even don't like me - which is of course absolutely no problem - but that does not mean everything I say in incorrect or wrong

See post 50 again on this thread - re below

Random 12345 quote that he is totally correct on - and I amazed that I am agreeing with what he said - as although he was a very clever guy - as far as I was concerned - he was pure commercial and not got a clue about retail FX trading

His quote -

The big four* will always tax traders etc on spread betting income if they carry on a trade that is related to financial derivatives or high wealth individuals who only trade. Complexities arise when trading forms a smaller part of your portfolio, but may still produce significant income.

It is always free from CGT as no tax is levied in general language on capital gains. Income tax is levied in general language on non hobbyists pursuing a profit from activities.

*Referred to the Top 4 accountancy firms ( KPMG are one and had advised me ) so for Barjon to say I was given bad advise is ludicrous and worthy of as as he calls it a "health warning" is out of order.

Tim - surely you are worldly enough to know the Spreadbetting companies will always advise their clients to check out their own tax situation etc.

We agree maybe 90% of all spreadbetting will be tax free - no argument with that - especially with the fact that 75 to 85% spreadbetters maybe lose and therefore don't make annual profits to be even considered.

BUT

As I keep saying - its different for a full time spread better who is making annual profits and is not paying any tax via other forms of income.

As CV correctly said - it might only be a very small percentage etc and so in the main spreadbetting is tax free to the majority.

So who should be getting the health warning - me or the spreadbetting companies ?

Also - and I will not name him - there is a member in the past who claims he has made 100's of thousands over many years from financial spread betting and as paid no tax - even though he is at full time - but is satisfied by the answer given my his local tax office that he is OK and he is not worried at all as if he his investigated as he feels he will win the case - etc etc.

If I was him - I would be worried - but then I am no Tax expert - just a guy with years and years of business experience

Regards


F

 

[Jack o'Clubs]

http://www.hmrc.gov.uk/manuals/bimmanual/BIM22017.htm

Pretty clear and from the horse's mouth. Remember the spreadbet firm will have paid betting duty on your behalf (one reason why it's a relatively expensive form of trading) and so the can of worms were they to go after 'professional' spreadbetters is more than just allowance of losses. House of Lords have also looked at this previously and decided to leave well alone .

 

[Forexmospherian]

Agreed Jon. I'm seriously considering putting forward an idea along these lines to Sharky and the Mods for their consideration.


Hi FoMo,

......................


The forum is completely open. Representatives of spread betting companies are free to post at any time. Step up to the plate and provide your evidence or back down.


On the contray, you can do a whole lot more. One single piece of evidence that I and others have asked for repeatedly would be a great starting point. If you fail to do that, all subscribers to this thread will surely conclude that I - and just about all other contributors to the thread - are right about you and that your argument has more holes in it than a very leaky sieve.
Tim.

Hi Tim

Ok - will step up to the plate.

Not just with one piece of evidence - but with loads - all from different sources.

Lets just look at the first spreadbetting companies web site I visit - ie IG INDEX.

http://www.ig.com/uk/spread-betting...yYAjw&ef_id=VN0ZqQAAAFPfzIQ-:20150301233217:s

As you would expect

Headline -


Spread betting
Financial spread betting is the tax-free* way to take advantage of rising or falling markets


Notice the small asterisk by "tax free* "

At the bottom of the page in small print -


* Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.

This is their safe guard - ie depends on individual circumstances


They would not been placing this bit of small print if it was 100% tax free to all spread betters - and I am sure you know that - but maybe like 97%+ of all other traders who have used spreadbetting - believe that it is tax free to everybody - ie with no exceptions.

I will check out say another 5 other spread betting companies to see if they are any difference.

If they use decent legal advisers - then I feel sure they will have there "get out of being sued" card .

I am not going to bother contacting the other top 3 Accountancy groups for their input - you will just have to believe Random 12345 previous comment on that - and I believe so many members here looked upon him as totally "kosher" - well that's what they kept telling me ;-))

Not going to do it all tonight - but maybe over the next few days etc

Regards


F

 

[Forexmospherian]

CMC spreadbetters -

http://www.cmcmarkets.co.uk/en/spread-betting/what-is-spread-betting


Very small print -

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

 

[timsk]

Hi FoMo,

I am delighted Tim wants this subject bringing to a "head" or an "end".

I don't recall saying either of those things - but never mind!

I appreciate there are many members here who have no respect for me and even don't like me - which is of course absolutely no problem - but that does not mean everything I say in incorrect or wrong.

I have a lot of respect for you FoMo although, sadly, it's mostly for the wrong reasons. I'm sure if we ever met belly to belly I'd find you a charming and engaging person and very different to your online persona. And, for what's worth, I don't think that everything you say is wrong.

Random 12345 quote that he is totally correct on - and I amazed that I am agreeing with what he said - as although he was a very clever guy - as far as I was concerned - he was pure commercial and not got a clue about retail FX trading . . .

I'm not going to debate the content of post written almost 2 years ago by a former member who isn't here to expand or clarify on what they said. Of course there is a lot of opinion and conjecture out there on this topic - I don't dispute that for a minute. What I am calling into question is the lack of verifiable hard evidence from the sources that matter: HMRC, FCA, Trading Standards and Advertising Standards etc. More on that in a bit.

. . . We agree maybe 90% of all spreadbetting will be tax free - no argument with that - especially with the fact that 75 to 85% spreadbetters maybe lose and therefore don't make annual profits to be even considered ...

This implies that SB clients don't pay tax if they lose. I'm glad to hear it, lol! So it's the 10% (or whatever the figure is) that are profitable that we're concerned with here. I dare say there are a few SBers out there who open an account and have the occasional punt once in a while like I might on the Grand National once a year. However, most people that come up with a strategy that makes money will keep doing it - surely? The idea that someone develops a winning methodology and then decides not to trade it - strikes me as being pretty unlikely. So, this leaves us with a small percentage of people who constantly make money. Do they pay tax on their winnings or not? You say they do and, until presented with hard evidence to the contrary, I say they don't.

. . .As I keep saying - its different for a full time spread better who is making annual profits and is not paying any tax via other forms of income. . .

Okay, can you answer me this: what's the tax threshold from 'other forms of income' that SBers must exceed to avoid having to paying tax on their SB profits? Please supply evidence in the form of case studies, HMRC policy documents etc.

So who should be getting the health warning - me or the spreadbetting companies ? . . .

Still you I'm afraid at this juncture FoMo!

http://www.ig.com/uk/spread-betting...yYAjw&ef_id=VN0ZqQAAAFPfzIQ-:20150301233217:s

Spread betting
Financial spread betting is the tax-free* way to take advantage of rising or falling markets

Notice the small asterisk by "tax free*" At the bottom of the page in small print -

* Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.

This is their safe guard - ie depends on individual circumstances
. . .

Aha, finally! Credit where credit is due - this is the first piece of factual evidence to support your case. It's not much, but it's a start. Can you build your case from here by providing more solid evidence that actually supports your claim that not all SB profits are tax free?

CMC spreadbetters -

Very small print -

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

I'm happy to accept your argument that SB firms cover their backs in terms of tax laws being subject to change and that their clients are advised to seek professional advice regarding their tax liabilities etc. As others have pointed out - if someone is running a business providing tips and education etc., then they might be liable to pay tax. My guess is that the riders you've highlighted from the SB firms are primarily aimed at people like this, not at the individual retail trader who is consistently profitable. It's this latter category that we're focusing on here, so now I want to see one or more of the following . . .
1. A SB firm that has been sued and/or reported to the regulatory bodies for miss selling their products, i.e. by someone who opened an account and traded with them on the grounds that it was tax free and has then had to pay tax.
2. A directive from Trading Standards or Advertising Standards clearly stating that SB firms can not claim to offer tax free trading.
3. A case where the FCA have been involved following a complaint about SB firms offering tax free trading.
4. Examples where rival brokers (who lose business to SB firms or, alternatively, stand to gain hugely if it can be proven that SB profits are not tax free) call into question the right / ability for SB firms to be allowed to offer tax free trading.
5. Policy documents or letters from HMRC clearing stating that profits made from SB are not tax free. Or, if they are tax free in some cases but not in others, a clear explanation as to who will have to pay tax and under what circumstances etc.

You're out of the starting blocks FoMo, but you've still got a long way to go!
Tim.