Spread betting and Tax

[al-motor]

Hi All,

Not sure if this is the right place, but anyway.

I havent been on here for a long time. I know that generally spread betting is classified as tax free ( CGT), but I do remember people saying that
if the HMRC sees profits as your MAIN income, then it will become taxable ?

Anyone has any experience of this ? What do we mean by MAIN ? more than 30% of your income ? or more than 50% perhaps ?

Presumably if so, they will treat it as additional income and therefore, income tax?

Anyone has any experience of this ?

Thanks in advance

Al

 

[Trader333]

Hi Al, it's a long time since we communicated and I hope all is well with you. Have a look at this thread which may help.

Tax & spreadbetting, for full-time, sole source of income traders

http://www.trade2win.com/boards/showthread.php?t=16552 Pringle - Hi, I am a full time spread-bet trader. I have been making good money doing this for nearly four years. I trade a £40K account split between two SB firms. I pay no tax and have a letter from the IR stating that I do not have to pay...

www.trade2win.com

Although some people keep saying that HMRC will tax those who use SB for their main income, I have never come across it. The key issue is that if HMRC can tax SB profits then by the same measure any losses incurred by SB can be offset against tax. That would leave HMRC in a difficult position because then everyone could claim they are full time SB traders and offset all losses that most would incur. The extra revenue that HMRC may gain from full time traders would be lost by those losing in my view.

There have been many (and often quite heated) exchange of views on this subject so your post may be the catalyst for a phoenix from the ashes arising

 

[BigDeal]

There is no tax implications for a UK resident profiting though spreadbetting. There have been political / governmental debates about this in the past, and the option to tax has always been dropped.
The confusion sometimes arises when people misinterpret the HMRC definition of carrying on (spreadbetting as) a trade. What this means is that if you set up a spreadbetting business, and offer the spreads, you will be taxed as a business. (and rightly so). You are not taxed as a 'punter'.

 

[tomorton]

For several years at one time SB was not my main income, it was my ONLY income. HMRC have no interest in SB. They will not even send you a self-assessment form.

 

[tomorton]

Hey there! It's been a while since I've been active here, too. When it comes to spread betting, the consensus is that it's classified as tax-free under CGT. However, I've heard that if the HMRC considers your profits as your main income, they could become taxable. Now, the question is, what exactly do we mean by "main" income? Is it more than 30%, or maybe more than 50%, of your total income? If it's considered additional income, then income tax might come into play.

This is an urban myth. HMRC do not make exceptional decisions like this based solely on the level of capital being received.

If they did, then surely the same rule would apply to every large winner of the tax-free lottery or the tax-free Premium Bonds draw. And it doesn't - these winnings are not taxed, no matter how big the win.