Yes indeed; I think you make a lot of good points here, jsd. I think that these are among the many reasons why the Revenue, in its infinite wisdom, hasn't yet tried to assess anyone for income tax on spread-betting winnings by claiming that it's his/her sole income. I think there are a number of other reasons as well, and that in practice it will probably be quite a long time before there's a test-case on it. It took them a long time to take anyone to court for income tax on horse-race winnings when it was their sole income and declared profession, although admittedly the principle's now well established, and with a body of supporting case law, that the "normal" income-tax exemption on horse-race winnings doesn't apply to a full-time professional horse-race backer. This has been debated (exhaustively!) in other threads here. But clearly you're right to point out that there are "ways round it", perfectly legally and properly. I suspect that (as with other areas of tax law) there'll only be litigation over it (and therefore applicable case-law) when they find someone really bloody-minded who wants do dig his heels in and have a really big public fight with them regardless of the potential expense. (It's not going to be me!). Until then it remains a bit of a grey area. My own personal opinion (not that I'm an accountant) is that for the moment, there's no need to worry too much about the prospect of being assessed for income-tax on spread-betting profits.jsd said:hmm wonder if it was say someones sole source of income being taxed and being earned under self employed basis etc if they then would have to (by acknowledgement of the former) allow you to offset any future potential losses into next period? and you would i assume if being assessed for income purposes produce a trading p+l account netting off cost of sales against revenue etc. less expenses? pay the wife 10k to make you coffee and ummm file things...expenses, professional fees , capital goods tax allowances,depreciation on lots of things (hmmm, you'd need an accountant to get creative here ) casual labour expenses for stress relief from the visiting massage lady, and on and on.... crikey almost a respectable enterpriselets face it mp's make 120k vanish in expenses.
Spread Bet Prices
- Thread starter counter_violent
- Start date
- Watchers 7
Money_magnet1
Junior member
- Messages
- 31
- Likes
- 1
Just like to add my tuppence worth. Tried spread-betting for a relatively short period and will not be going back to it. Joined with IG Index and started off really well then things started to get a bit suspect.
Locked out when trying to close large points gains (especially positions held overnight when the next days market moved in favour), unable to get quotes at critical moments.
I understand the notion of protection for the sb company at open but there were some truly distorted prices and spreads at certain times.Funnily enough never to the customers benefit.
Add to this no built in real-time charting, problems withdrawing funds (two telephone reminders) and distorted real-time P/L information (even after taking into account the spread which they omit).
All in all I came away very disillusioned with IG Index. Three things to add, this was my experience with IG it may not be yours. It relates only to IG. If your making money spread-betting then obviously take no notice whatsoever
Locked out when trying to close large points gains (especially positions held overnight when the next days market moved in favour), unable to get quotes at critical moments.
I understand the notion of protection for the sb company at open but there were some truly distorted prices and spreads at certain times.Funnily enough never to the customers benefit.
Add to this no built in real-time charting, problems withdrawing funds (two telephone reminders) and distorted real-time P/L information (even after taking into account the spread which they omit).
All in all I came away very disillusioned with IG Index. Three things to add, this was my experience with IG it may not be yours. It relates only to IG. If your making money spread-betting then obviously take no notice whatsoever
When that time (worrying about the IR) comes you will be aware of it well in advance. The first step will be that legislation will be passed to change the tax status of spread betting and this will be well flagged. The reason those that spread bet do not need to concern themselves with this is simply that too many 'punters' lose their money and as a result the Inland Revenue make much more by taxing the companies' profits. Why would they want to shoot themselves in the foot and make less money?
Has anyone ever seen a bookmaker go to the wall (unless he in turn gambles)? I doubt it, it is simply because when 'making a book' a margin is always priced in. Take IG Index as a simple example; when one wants to buy/sell shares in AstraZeneca, you are quoted the market spread plus IG spread; where is the downside for them? The Inland Revenue step forward and take their slice of the cake regardless of the success or failure of the trade (that will do nicely thank you). It follows that the more trades placed, the better for IG Index and the Inland Revenue. For those that also use Direct Access, what is the DOW spread? 1 point maybe 2; Deal4Free and CapitalSpreads add another 3 to 4 points and IG Index add another 5 - 6; they all make money and the Inland Revenue step forward once again (win or lose). As long as the companies offset/hedge their positions everyone does very nicely thank you.
Before the detractors step forward and say, "aha we told you so, it is a fools' game;" consider the fact that you require much less capital to spread bet and there is a much higher degree of gearing.
Has anyone ever seen a bookmaker go to the wall (unless he in turn gambles)? I doubt it, it is simply because when 'making a book' a margin is always priced in. Take IG Index as a simple example; when one wants to buy/sell shares in AstraZeneca, you are quoted the market spread plus IG spread; where is the downside for them? The Inland Revenue step forward and take their slice of the cake regardless of the success or failure of the trade (that will do nicely thank you). It follows that the more trades placed, the better for IG Index and the Inland Revenue. For those that also use Direct Access, what is the DOW spread? 1 point maybe 2; Deal4Free and CapitalSpreads add another 3 to 4 points and IG Index add another 5 - 6; they all make money and the Inland Revenue step forward once again (win or lose). As long as the companies offset/hedge their positions everyone does very nicely thank you.
Before the detractors step forward and say, "aha we told you so, it is a fools' game;" consider the fact that you require much less capital to spread bet and there is a much higher degree of gearing.
prisoner66
Junior member
- Messages
- 10
- Likes
- 1
I agree.......my experience with the tax office has confirmed that spread betting is a tax free pursuit, certainly for the moment. When such a time comes when they intend to make it clearly taxable, there will be ample warning.
However, I was thinking just now (whilst looking at my SB screens ), that if it is taxable as income, that means costs are allowable against tax liability right. Does this suggest that the "spread" it'self becomes a legitimate cost?
Also......when I hear those "fools game" comments and similar negatives, I think it all suggests, intended ot not, that other forms of trading are really safer and easier and far less risky. Well oddly enough the're not are they. And far from protecting newcomers from so called evil the comments do a good job of pushing the now confident inexperienced right into another form of trading to lose money.
Lets not forget that ALL forms of stock market related earning methods carry high risks of losing money. A spread bettings strength is that it is very easy to start and requires less capital. This can also be a source of frustration since it could encourage a more casual attitude toward doing it resulting in significant losses. Hence the reason for some of the scare stories and negatives oft bandied about.
However, I was thinking just now (whilst looking at my SB screens
), that if it is taxable as income, that means costs are allowable against tax liability right. Does this suggest that the "spread" it'self becomes a legitimate cost?Also......when I hear those "fools game" comments and similar negatives, I think it all suggests, intended ot not, that other forms of trading are really safer and easier and far less risky. Well oddly enough the're not are they. And far from protecting newcomers from so called evil the comments do a good job of pushing the now confident inexperienced right into another form of trading to lose money.
Lets not forget that ALL forms of stock market related earning methods carry high risks of losing money. A spread bettings strength is that it is very easy to start and requires less capital. This can also be a source of frustration since it could encourage a more casual attitude toward doing it resulting in significant losses. Hence the reason for some of the scare stories and negatives oft bandied about.