Captial Gains Tax rate on CFD trading when you have no income

tomorton

Legendary member
7,277 972
This is great thanks malaguti. Some of the wording sounds familiar, I'm sure we've had it posted up on the site before now. I only hope HMRC don't change the rules.
 

0FXTrader0

Member
57 2
Says if your living of the profits its income tax...Although you could be liable to income tax if your spread betting is deemed to be a trade, that is if you're living off the profits made.

 

malaguti

Senior member
2,359 454
Says if your living of the profits its income tax...Although you could be liable to income tax if your spread betting is deemed to be a trade, that is if you're living off the profits made.

if you have a look at the wording they use..
"Although you could be liable to income tax if your spread betting is deemed to be a trade, that is if you’re living off the profits made."
HMRC is very clear on what is deemed to be a trade. the website you posted seems to have misinterpreted that definition.
 

barjon

Legendary member
10,279 1,558
if you have a look at the wording they use..
"Although you could be liable to income tax if your spread betting is deemed to be a trade, that is if you’re living off the profits made."
HMRC is very clear on what is deemed to be a trade. the website you posted seems to have misinterpreted that definition.
Yes, we’ve been over this so many times.

The fact that you might be living off your spreadbetting profits does NOT deem the spreadbetting to be a trade. If you are spreadbetting alone you are not in trade. You would be if, for example, you are selling trading systems as well when your spreadbetting might be considered as part of your overall business.
 

0FXTrader0

Member
57 2
I agree that this website moneyadviceservice is most likely incorrect on the subject.
 

new_trader

Legendary member
6,214 1,268
Yes, we’ve been over this so many times.

The fact that you might be living off your spreadbetting profits does NOT deem the spreadbetting to be a trade. If you are spreadbetting alone you are not in trade. You would be if, for example, you are selling trading systems as well when your spreadbetting might be considered as part of your overall business.
Yes, I agree spread betting profits are tax free if you only profit from making bets. "Carrying on of that trade" means that you are acting as a broker and your profits arise from that trade, i.e. Commisions and losses of clients.
 

Rainmaker

Active member
200 2
For my ha'pennies worth -
HMRC know that most punters lose while spread betting, so it does not want to tax it as it would also have to give tax relief to losers. I don't think its about size of the profit, as the other side is that big losers ought to be given relief.
Trading inside a limited company is a dinner matter - trading is trading and subject to corporation tax.
 

tomorton

Legendary member
7,277 972
For my ha'pennies worth -
HMRC know that most punters lose while spread betting, so it does not want to tax it as it would also have to give tax relief to losers. I don't think its about size of the profit, as the other side is that big losers ought to be given relief.
Trading inside a limited company is a dinner matter - trading is trading and subject to corporation tax.

Exactly. My then accountant told me some years back they would love to get me classed as subject to income tax as a professional gambler / trader but they wouldn't even bother to try it. So many have tried and been rejected by HMRC because once the precedent was established, HMRC would have no way of computing the exact tax relief liability they would face from losers. The potential stock of losers is unlimited.
 
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new_trader

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6,214 1,268
So many have tried and been rejected by HMRC because once the precedent was established, HMRC would have no way of computing the exact tax relief liability they would face from losers. The potential stock of losers is unlimited.
I think it goes beyond that. One area UK gambling laws focus on is protection for children and vulnerable adults and that includes a minimum legal age for gambling and self-exclusion options for adults with gambling addiction. If HMRC were to class gambling as a profession subject to income tax it would legitimize it and create all sorts of complications with regard to laws and who they are trying to protect. Can you imagine a child saying they want to be a professional gambler just like their father.
 
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Parky

Active member
237 28
HMRC will look to see if this is your principal source of income and this is important point. The trap many people fall into is assuming the rules apply evenly, they do not. The assumption is that Spread betting is a casual activity and is over and above the individuals job or main source of income. When the Trading, be it CFD or Spread betting, is the principal source of income then you pay tax on that income. To quote Damien Green MP who was asked about this he stated clearly that anyone who believes they can earn a living in the UK and get away with paying little or no Tax is deluded. So the tax treatment of Casual Gambling or Trading differs greatly if this is your principal source of income.
 

malaguti

Senior member
2,359 454
HMRC will look to see if this is your principal source of income and this is important point. The trap many people fall into is assuming the rules apply evenly, they do not. The assumption is that Spread betting is a casual activity and is over and above the individuals job or main source of income. When the Trading, be it CFD or Spread betting, is the principal source of income then you pay tax on that income. To quote Damien Green MP who was asked about this he stated clearly that anyone who believes they can earn a living in the UK and get away with paying little or no Tax is deluded. So the tax treatment of Casual Gambling or Trading differs greatly if this is your principal source of income.
And HMRC is quoted (written down as tax law) as saying that spreadbetting is outside the scope of income tax.
i know who assesses my tax, and it sure aint Damien Green
 

Parky

Active member
237 28
And HMRC is quoted (written down as tax law) as saying that spreadbetting is outside the scope of income tax.
i know who assesses my tax, and it sure aint Damien Green
Which misses the point, it is not what you are doing Spreadbetting is outside, provided you do not make a living out of it. Once it becomes your principal source of income then regardless of whether you are selling marbles or flogging DVD's from the back of your car it is taxable. If you think you can make a living tax free then you are in for a shock sooner or later.
 

malaguti

Senior member
2,359 454
mate, all i can do is quote and interpret HMRC

Outside the scope is very clear. The whole subject is outside the scope, only unless its part of your business.
unless you can find HMRC quoting (not an MP, or heresay or other websites) im happy to agree with you.

it doesn't state anywhere in their case law, whether it was the primary source of income
 

Parky

Active member
237 28
This from HMRC "Since gambling winnings are normally considered miscellaneous income for casual gamblers, they are not subject to self-employment tax. However, professional gamblers do incur self-employment tax on a gambler tax return. "
 

malaguti

Senior member
2,359 454
yep, now read it in its entiirety
what is the definition of a professional gambler?

Some ‘professional gamblers’ do carry on a trade, for example, where they receive appearance money for appearing on television programmes. They are providing a service to a customer (the television production company) for reward. Whether their gambling winnings are proceeds of that trade would depend upon the facts.

HMRC are very clear..
 

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