How Complicated Is/Are Tax Reporting/Returns?

tomorton

Legendary member
8,420 1,345
Not true. Nobody in the UK can earn a living tax free regardless of the source or instruments involved. If your principal source of income is trading, wether it be spreadbetting, CFD's or straight gambling you will have to pay tax. Anyone who thinks they can earn a living in the UK without making a tax contibution needs to to take professional tax advise....FAST.
There is not a single reported incidence of any trader paying tax on spreadbetting gains.
 

Parky

Well-known member
260 32
Again, you miss the point. If you are spreadbetting casually or it is not your main source of income then you wouldnt. If you are trading for a living you would. The fact you main income is derived from Spreadbetting is immaterial. If you truly believe you can earn a livivng in the UK tax free you are deluded or have taken some very bad tax advise. "If you’re living and working in the UK, or have taken up UK retirement, you are liable to pay UK taxes. " HMRC
 

Parky

Well-known member
260 32
If you sell a car on ebay is it taxable? No
If you make a living selling cars on ebay is it taxable? Yes
Same difference
 

tomorton

Legendary member
8,420 1,345
Again, you miss the point. If you are spreadbetting casually or it is not your main source of income then you wouldnt. If you are trading for a living you would. The fact you main income is derived from Spreadbetting is immaterial. If you truly believe you can earn a livivng in the UK tax free you are deluded or have taken some very bad tax advise. "If you’re living and working in the UK, or have taken up UK retirement, you are liable to pay UK taxes. " HMRC
This is a very common perception of spreadbetting and tax. Its a reasonable assumption that the UK government would not offer such a tax-free advantage. All I can say is that while we each have our own opinions, we would each need some evidence for us to change our respective positions.

Do you point to a trader who has paid tax on spreadbetting gains?

On the other hand I can point to a trader who has derived their main income from trading and who has not paid tax on spreadbetting gains - me.
 

Parky

Well-known member
260 32
If you ask a qualified accountant, "do I have to pay tax on my spreadbetting" he will say "No"
Ask the same guy, "If I trade for a living and my main source of income is spreadbetting, do I pay tax on the income?
He should say "Yes".
Totally different questions.
But you are right, people have to do their own investigations and it is important people do that.
We have over thirty traders and when this tax "wheeze" first appeared many traders made the transition from trading outright to manufactured spread bets on the understanding that this tax "wrapper" would do just as you have indicated. Make their trading tax free.
On paper it did, but as I have pointed out traing in this way does not change the obligation to pay tax on your principal income. So yes to answer your question all of our traders pay tax on their principal income.
Not having paid tax is not proof in itself that you should not have been paying it.
It just means you have got away with it thus far. Good luck with that.
 

BigDeal

Active member
117 57
This argument rages on and on. The fact is, spreadbetting is classified as gambling, and is grouped with winnings through a bookmaker (because that's what a spreadbetting provider is). It is not taxed, in exactly the same way that horseracing isn't, a lottery win isn't, a win at the casino isn't.

Spreadbetting in the UK has never been taxed since its creation. The subject has been debated in parliament, but the law has never changed.
 

tomorton

Legendary member
8,420 1,345
If you ask a qualified accountant, "do I have to pay tax on my spreadbetting" he will say "No"
Ask the same guy, "If I trade for a living and my main source of income is spreadbetting, do I pay tax on the income?
He should say "Yes".
Totally different questions.
But you are right, people have to do their own investigations and it is important people do that.
We have over thirty traders and when this tax "wheeze" first appeared many traders made the transition from trading outright to manufactured spread bets on the understanding that this tax "wrapper" would do just as you have indicated. Make their trading tax free.
On paper it did, but as I have pointed out traing in this way does not change the obligation to pay tax on your principal income. So yes to answer your question all of our traders pay tax on their principal income.
Not having paid tax is not proof in itself that you should not have been paying it.
It just means you have got away with it thus far. Good luck with that.
But I have not got away with anything. There is no tax liability on spreadbetting gains regardless of their amount and regardless of other income, if any.

The situation of the traders you mention is unclear and you might want to qualify your references to their status.
 

FXX

Experienced member
1,269 264
Tax Insider

Sophisticated On-Line Gambling – Does This Still Hold As “Tax Free”?​

By Julie Butler, September 2010



The UK Tax Position of the Professional Gambler​

Essentially betting is “tax free” – the professional gambler is outside the scope of tax. This is confirmed in HMRCs Business Income Manual (BIM) at para 22015. The basic position is that betting and gambling, as such, do not constitute trading. Rowlatt J said in Graham v Green (1925) 9 TC 309:
“A bet is merely an irrational agreement that one person should pay another person on the happening of an event.”
This decision has stood the test of time. In an Australian case, Evans v FCT (1989) 20 ATC 4540, Hill J said:
“There has been no decision of a court in Australia nor, so far as I am aware, in the United Kingdom where it has been held that a mere punter was carrying on a business.”

Is spread betting tax free?​

So is a sophisticated on-line gambler a “mere punter”? 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.

What guidance does HMRC give on gambling and tax?​

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 Professional Gambling Considered Trading for Tax Purposes?​

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. How does the pro-punter deal with the issues of tax compliance?
The safe answer has to be to make HMRC aware of the position. This can be done by simply writing to the pro-punter’s local tax office stating that he or she has income from gambling and to record the details each year on a tax return. It is also important to obtain clearance from HMRC via “Code of Practice 10”.

Why is Gambling “Tax-free”?​

It is assumed that the simple answer is that HMRC could not cope with the tax claim for gambling losses! The sporting world involves a large amount of gambling at all levels. In practice, if HMRC tried to assess the “winners” to tax there would be a deluge of tax loss claims.

Practical tax tip- Gambling​

Keep a record of winnings in case evidence is required at a later stage. HMRC always need to verify sources of income and windfalls in an enquiry situation, so it is important to keep records to avoid any future problems over (say) the identification of any capital introduced in to a business.
 

FXX

Experienced member
1,269 264

BIM22017 - Meaning of trade: exceptions and alternatives: betting and gambling - the professional gambler​

The fact that a taxpayer has a system by which they place their bets, or that they are sufficiently successful to earn a living by gambling does not make their activities a trade.
The case of Graham v Green [1925] 9TC309 concerned a man whose sole means of livelihood came from betting on horses at starting prices. Rowlatt J says at pages 313 and 314:
‘Now we come to betting, pure and simple… the man who bets with the bookmaker, and that is this case. These are mere bets. Each time he puts on his money, at whatever may be the starting price. I do not think he could be said to organise his effort in the same way as a bookmaker organises his. I do not think the subject matter from his point of view is susceptible of it. In effect all he is doing is just what a man does who is a skilful player at cards, who plays every day. He plays today and he plays tomorrow and he plays the next day and he is skilful on each of the three days, more skilful on the whole than the people with whom he plays, and he wins. But I do not think that you can find, in his case, any conception arising in which his individual operations can be said to be merged in the way that particular operations are merged in the conception of a trade. I think all you can say of that man … is that he is addicted to betting. It is extremely difficult to express, but it seems to me that people would say he is addicted to betting, and could not say that his vocation is betting. The subject is involved in great difficulty of language, which I think represents great difficulty of thought. There is no tax on a habit. I do not think ”habitual” or even “systematic” fully describes what is essential in the phrase “trade, adventure, profession or vocation”.’
This shows that having expertise or being systematic (‘studying form’) is not enough to create a trade of being 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.
 
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FXX

Experienced member
1,269 264
the issue with the confusion around this debate is the statement "carrying on the trade" and interpretations of it being incorrect. Carrying on the trade does not mean you are suddenly taxed if doing it full time. it's meaning is described in

BIM22017​

with examples. There is lots of bullshit on this even on some websites but they are wrong. To argue this you would need to show a single case where a professional spreadbetter has been reported to have been liable for tax. Good luck finding one
 
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