Spread betting enquiry

[Ross-G]

Hello all traders!

I am considering adding some spreadbetting to my activities.
I was wondering, if I was trading day to day through Oanda etc for short positions
and Spreadbetting firms for swing positions (after reading some news feeds etc),
is it still the case that I don't pay tax on the spreadbetting (while there's CGT payable on Oanda profits)?

What I mean is; has anyone experienced any problems in keeping their spreadbetting tax free if they are trading with it quite a bit and also paying tax on fairly similar activities on retail brokers?
In other words is it at some point judged differently?

Also, I see a lot of you slate D4Free spreadbetting. Are there any spreadbetting firms with an enlightened approach don't just start targetting you if you're successful? (i.e.maybe older more respectable companies that still 'hedge' succssful clients?)

Any info at all greatly appreciated!

 

[Roberto]

Are there any spreadbetting firms with an enlightened approach don't just start targetting you if you're successful? (i.e.maybe older more respectable companies that still 'hedge' succssful clients?) Any info at all greatly appreciated!

I believe that CapitalSpreads hedges all clients without distinguishing about "successful". There's a thread here somewhere about them. I think they'd say that they're in the category of "newer more respectable", though.

Regarding your question about tax, I'm no expert but have never heard of anyone having the potential problem you alluded to, and would be _extremely_ surprised to hear about it. I think that tax could only ever possibly be an issue if spreadbetting were your sole source of income, and it would need a big "test case" for the Revenue to get anywhere with it, even then.

 

[LION63]

Spread betting is considered gambling in the UK by the Government and legislation, as such, all your profits are tax free and will remain so until the laws are changed. Based on that, if you were to make profits in your other trading activities and lose spread betting, you could not offset your losses for tax purposes. Neither will you be able to claim for subscriptions, magazines, internet connection etc. The Inland Revenue will not tax your profits regardless of the numbers involved.

Whilst a lot of us have made derogatory remarks (well founded) about Deal4Free, one must bear in mind that they are very competitive and they do have a decent trading platform. IG Index are quite good as they have a vast array of betting options for the trader, the downside is that they have wide spreads. It is probably best to have at least 2 spread betting accounts.

 

[jsd]

with the tax issue on spreadbets, i think the tax people may have an angle to tax if spreadbetting is your Primary source of income, I assume you wont pay CGT tax but if its your sole income they may have a point with you paying income tax on your tax free gains.... Not sure though, a call to the technical tax office in London will show the way likely, also assume no one would shout out to them if it is your primary source either...
I mean dont go looking to pay it

JD..

 

[LION63]

As you are not what is classified as a professional gambler (one who takes bets) there is no tax liability regardless of if it is your sole source of income or not.

 

[Ross-G]

Thanks for the info.

What I was most worried about was a situation where they could 'change the rules' according to which was the most successful (ie-if you were to make profits in your other trading activities and lose spread betting, you could not offset your losses for tax purposes but if the betting was more successful they could say 'that's your primary income this year... give us our 30/40%..)etc... which wouldn't be fair.

 

[LION63]

You will not need to worry about that, society at large believe that gamblers are losers. You are viewed as people always looking to get rich quick, what most fail to realise is that there is not much difference between margined trading and spread betting.

Best of luck.

 

[Roberto]

What I was most worried about was a situation where they could 'change the rules' according to which was the most successful.

No, it doesn't work that way. There's even case-law on this point. You can earn some modest living from whatever source on which you pay income tax, and also make an unlimited amount from "gambling" on the side (if you have the ability, that is!), and the Revenue can't tax you on the gambling winnings at all, and that includes spreadbetting income.

I agree 100% with everything Lion says above. Especially his good point about the importance of having two different spreadbetting accounts.