Spread betting tax situation

CityTrader

Established member
665 26
Heading towards the end of the year, having made a decent sum, I have decided to obtain a ruling from the Inland Revenue regarding the tax status of Spread betting income.
Obviously, anyone else who has had a ruling would influence the outcome of my situation. Has anyone out there had a definitive ruling from the revenue in writing -confirming that CFD's are taxable, and Spreadbetting isn't. If it is, if the income was CGT or income?

Please PM if you'd rather not make yourself public.


Wayno
 

mos3329

Junior member
45 0
Wayno

I wouldn't open a hornets nest!

The IR have enough on their plate planning more taxes in cahoots with Brown.

As you probably know, SB comes under the betting regime and is only tax free to us because the bookies started moving offshore when Brown threatened to clobber the punters.

I assume things will stay like that as if he tries to tax SB he knows they will go offshore and he loses all the revenue.

I must admit I hab a moment or three of Schadenfreude when Brown was royally trumped by the bookies and he realised that, for once, he was not in charge of the situation.

If you go to www.inlandrevenue.gov.uk you can find the actual piece of legislation that covers this.

The only query (as yet untested I believe) is whether the IR could make out a case for charging the gains to income tax, of someone whose sole income is derived from SB.

But you would have to draw this to their attention and there is no obligation for anyone to do so, as the legislation in its present form is quite clear - winnings from betting are non taxable.

Hope this helps

Mike
 

CityTrader

Established member
665 26
Mike, thanks, and you're right- It is a can of worms, and it isn't that clear. I have decided to declare myself to the Inland Revenue, and let them make a ruling. As, my sole income is derived from spead betting. If I am going to be liable for tax on Spread betting, then I need to know now, so I can switch to CFD's which are of course liable for tax, but a lot cheaper to deal in. All I'm now trying to do, is find any precedents...

Wayno
 

JonnyT

Senior member
2,560 22
Wayno,

Please keep us posted.

My belief is that they might deem you liable for income tax as its your main source of income. I understand this has happened to others despite the IR being on slightly dodgy ground.

Defending such a ruling would cost £100,000s so everyone probably just pays up when challenged.

JonnyT
 

Scripophilist

Active member
221 7
The IR can not tax betting income as it would have to give relief for losses due to betting, As all bookies are overround this would lead to an impossible situation.

That said I wouldn't put it past them!!

They had succesfully got several people to pay tax on betting income by using obscure laws and some have got away but the overall situation is that if you are predominately a backer then there situation on tax is that the IR is untenable in its desire to tax.
 

bonsai

Veteren member
4,106 10
At least Daniel was thrown into the den of Lions.

But to walk in of your own volition on your own ?

After all the posts on this subject ?
 

DaveJB

Experienced member
1,159 42
My accountant sez....
you have to watch it, whilst gambling isn't taxed as income the IR can decide you're earning your living trading and treat it as earnings (probably, maybe). I've been advised that my CGT from investing might turn into income tax if the taxman decides he'll be better off charging me that way, by claiming stocks and investing are my business rather than a feeble attempt to avoid dogfood on toast at 65.
The impression I was left with was that the taxman has a degree of freedom in deciding which method of squeezing would produce the greatest revenue, and is inclined to go with the option that leaves me closest to poor. (Frankly the overall idea seemed to be that it was only IR lethargy - too much paperwork to bother with I guess - and my own poor trading record keeping me from legalised plundering).
A competent legal opinion would be rather better, no doubt, but there does seem to be a problem with the potential - at least - for gains to be treated as income rather than a gambling win.
Dave
 

CityTrader

Established member
665 26
Bonsai- I'd rather know now, than find out in 5 year time.
DaveJB - My accountant says there's a Tax payers charter which says all taxpayers must be treated equal. If I do end up paying tax, I'll certainly post it on here and hopefully the other 99% who lose money can try and claim it back.

My understanding nis that the IR, can assess each situation individually - and the rulings aren't generally made available to the public domain. I won't go to court over a negative ruling, but will invest a few thousand in decent tax counsel.

Wayno
 

oatman

Senior member
2,879 22
Surely the spreadbetting companies must have done some research on this.
It's in their interests to know.
 

bonsai

Veteren member
4,106 10
CT
I gather from your response you may have missed the point. ?

Don't queer the pitch by trying to do it yourself.
Get proper advice before anybody goes anywhere near the Revenue.

You only have to pay once for good advice, but if you queer the pitch, you may have to pay the price in every future year.
 

CityTrader

Established member
665 26
Bonsai - no, I don't think I have missed the point.
The transactional costs for me to SB is significantly higher than CFD's. And if I'm going to end up paying tax anyway, I need to know sooner rather than later. Also, I could really, really live without the Inland Revenue coming after me in (say) 2 years for back taxes. It really is a case of " better the devil you know, etc, etc"

Oatman - not so sure- they (of course) claim " under current legislation, etc, etc) " l ast thing they want is someone liable for tax. Hmmm maybe I should see if my main SB company wants to fight my corner for me?!

W
 

oatman

Senior member
2,879 22
I was thinking along the lines of emailing them all the same questions and see what the consensus is. Maybe then start digging a bit deeper and see what they come back with.
 
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bonsai

Veteren member
4,106 10
Ct
I didnt say you shouldnt know "sooner rather than later"

I said you shouldnt approach the Revenue without first getting
proper advice.

but it sounds like you may have already made up your own mind. ?
 

CityTrader

Established member
665 26
I need to find someone who has been in the same situation - sole income is from trading/SB and has had a definitive ruling from the inland revenue.