Hi all. i'm a newbie here, but have read the discussion with avid interest - don't take the nickname too seriously 
My situation is, i earned some money as an employee (with PAYE tax deducted) in the first half of tax year (apr 2002 - apr 2003), left that job halfway through the year, and set up as a daytrader. With some theories but little experience, i at first used only actual shares, buying and selling several times a day, and the next tax year branched out to using CFd's warrants, and spread betting.
Not too many reading will be surprised to hear that my losses for that year were more than my gains, so much so that when set against my earnings as an employee (during the first half of the year) it brought me below the £4800 annual threshold for paying income tax.
So my accountant i put that down, first half of year, employed, butcher, second half of year, employed, equity trader, and applied for the tax i'd already paid under PAYE to be rebated. Which they did.
They have now written to me last month, saying that they're enquiring into this, because share losses are "normally" CGT losses and not income losses.
This is confirmed in http://www.inlandrevenue.gov.uk/manuals/bimmanual/BIM22015.htm on their website, where they claim all share dealing is in effect, gambling, just like horse race betting, even were someone to do this full time, and be profitable. The only exception would be for a broker, who buys and sells to different customers, who is analogous to a bookmaker in horse racing.
I intend to fight them, totally, based on the following argument.
If share dealing (not just SB or CFD) but even actual share dealing can not be considered as trade because it is in fact gambling, then it should be wholly exempt from CGT, like horse racing or Spread betting for that matter.
Of course, the treasury makes a huge income from the CGT people pay on share profits, so it clearly must NOT be considered gambling. If it isnt gambling, then someone who works at this full time must be able to declare himself as such, as a share trader, and be liable for gains / losses as income tax.
It would help me a lot if anyone has any actual statement or clear case where the revenue / treasury / courts have made any comment dealing with the following very simple question:-
Who has determined that horse - racing, casino betting, and spread betting are considered "gambling" and all profits from them are under current UK practice exempt from all taxes, whilst buying and selling actual shares, for immediate resale, several times a day, is considered not "gambling" but "investing"?
Or in other words, what are the guidelines that define "gambling" as outside the scope of taxes on its profits & losses, as opposed to "investing", which is liable to CGT on profits and losses?
What i would hope to establish would perhaps be a clear guideline that currently considers SB to be along with horses, cards as gambling and tax-free, whilst trading actual shares is NOT considered gambling and hence CGT liable. I would then hope to apply this definition of Share trading as "NOT gambling" to my case, of someone engaging in this form of investment activity as a full-time occupation, to be not a gambling hobbyist (as they claim) but a trading investor.
Its probably unwise to post my phone number here, but i'm not much of a typist or emailer, and if anyone wants a quick chat or an exchange of information / ideas / opinions on this subject, please call me any time on 07855 746572.
Although being a layman, I have done quite a lot of research into this whole area, and have quite a lot of related information, including the footwear company that gambled its spare cash on gilt derivatives, lost a package, and beat the revenue in court , showing that this was a trading and not a gambling or investment activity.
Anyway, its a long enough post for now - thanks for reading it all!
My situation is, i earned some money as an employee (with PAYE tax deducted) in the first half of tax year (apr 2002 - apr 2003), left that job halfway through the year, and set up as a daytrader. With some theories but little experience, i at first used only actual shares, buying and selling several times a day, and the next tax year branched out to using CFd's warrants, and spread betting.
Not too many reading will be surprised to hear that my losses for that year were more than my gains, so much so that when set against my earnings as an employee (during the first half of the year) it brought me below the £4800 annual threshold for paying income tax.
So my accountant i put that down, first half of year, employed, butcher, second half of year, employed, equity trader, and applied for the tax i'd already paid under PAYE to be rebated. Which they did.
They have now written to me last month, saying that they're enquiring into this, because share losses are "normally" CGT losses and not income losses.
This is confirmed in http://www.inlandrevenue.gov.uk/manuals/bimmanual/BIM22015.htm on their website, where they claim all share dealing is in effect, gambling, just like horse race betting, even were someone to do this full time, and be profitable. The only exception would be for a broker, who buys and sells to different customers, who is analogous to a bookmaker in horse racing.
I intend to fight them, totally, based on the following argument.
If share dealing (not just SB or CFD) but even actual share dealing can not be considered as trade because it is in fact gambling, then it should be wholly exempt from CGT, like horse racing or Spread betting for that matter.
Of course, the treasury makes a huge income from the CGT people pay on share profits, so it clearly must NOT be considered gambling. If it isnt gambling, then someone who works at this full time must be able to declare himself as such, as a share trader, and be liable for gains / losses as income tax.
It would help me a lot if anyone has any actual statement or clear case where the revenue / treasury / courts have made any comment dealing with the following very simple question:-
Who has determined that horse - racing, casino betting, and spread betting are considered "gambling" and all profits from them are under current UK practice exempt from all taxes, whilst buying and selling actual shares, for immediate resale, several times a day, is considered not "gambling" but "investing"?
Or in other words, what are the guidelines that define "gambling" as outside the scope of taxes on its profits & losses, as opposed to "investing", which is liable to CGT on profits and losses?
What i would hope to establish would perhaps be a clear guideline that currently considers SB to be along with horses, cards as gambling and tax-free, whilst trading actual shares is NOT considered gambling and hence CGT liable. I would then hope to apply this definition of Share trading as "NOT gambling" to my case, of someone engaging in this form of investment activity as a full-time occupation, to be not a gambling hobbyist (as they claim) but a trading investor.
Its probably unwise to post my phone number here, but i'm not much of a typist or emailer, and if anyone wants a quick chat or an exchange of information / ideas / opinions on this subject, please call me any time on 07855 746572.
Although being a layman, I have done quite a lot of research into this whole area, and have quite a lot of related information, including the footwear company that gambled its spare cash on gilt derivatives, lost a package, and beat the revenue in court , showing that this was a trading and not a gambling or investment activity.
Anyway, its a long enough post for now - thanks for reading it all!
