Spread betting tax situation

[Lee Shepherd]

Here is a hypothetical for anyone to help with and this applies to that "subsistence" part or your sole income area . Say I open 2 accounts one with direct access or CFD's and the other a spread betting account . Say I earn £60,000 from my direct access or CFD trading that i am able to "live on as an income" and I earn £200,000 from my spreadbetting account . Is the spreadbetting account non taxable because you earn an income in your other trading , or would the IR say that because the £200,000 is more that ,that would be classed as your main income and still tax the whole lot..

I see your a long time member since Jan 2003, have a look around the boards, its been done to death.

Short answer and correct one is for U.K residents only:

You dont pay tax on winnings from gamblinng, spreadbetting is gambling and therefore not taxable, no matter how much it is, you dont pay tax on a million from the lottery and you dont pay tax on a poker night with friends.

No income or capital gains, its on every spreadbet website which is governed by U.K law and monitored by the F.S.A. Unless your a 'proffessional' which only implies that you do it as a business and are registered as so. Individuals dont pay tax or recieve tax breaks on wins/losses.

 

[maxvre]

For UK Residents from the IR site itself

BIM22015 - Trade: exceptions & alternatives: betting and gambling: introduction

The basic position is that betting and gambling, as such, do not constitute trading. Rowlatt J said in Graham v Green [1925] 9TC309:

“A bet is merely an irrational agreement that one person should pay another person on the happening of an event.”

This decision has stood the test of time. In an Australian case, Evans v FCT [1989] 20ATR922, 89ATC4540 Hill J said:

“There has been no decision of a court in Australia nor, so far as I am aware, in the United Kingdom where it has been held that a mere punter was carrying on a business.”

However, an organised activity to make profits out of the gambling public will normally amount to trading.

Although over time new forms of games of chance have evolved, these principles remain the same. The taxpayer placing a spread bet is not normally carrying on a trade (see BIM22020 for exceptions). They are not taxable on the profits, nor do they receive relief for their losses. The bookmaker organising the spread bet is taxable on their profits.

 

[stevespray]

The taxpayer placing a spread bet is not normally carrying on a trade (see BIM22020 for exceptions). They are not taxable on the profits, nor do they receive relief for their losses. The bookmaker organising the spread bet is taxable on their profits.

The key words in this quote are "not normally carrying on a trade"......

Someone whose sole income is derived from 'betting' could be 'not normal' in the context of the sentence. The sentence is quite subjective in my opinion.

I've been monitoring the IR website on the matter for a number of years - I noticed that initial their comments were very objective and make black or white type statements. However over that last couple of years their 'angle' seems to have changed slightly and their comments now create grey areas.

Steve.

 

[Vaco]

steve,

if you look at bim22020 it clears this up.

My understanding of this exception is that if you make money doing other activities which are a direct result of your spreadbetting then it is all taxable. as an example if you do nothing but spreadbet then you are tax free, however if you g on to write a book about it and get it published then you are taxable on your earning from the book and your spreadbetting as you are now arrying on a trade.

in this case the trade would be of 'selling books on the back of your spreadbetting success'

 

[stevespray]

steve,

if you look at bim22020 it clears this up.

My understanding of this exception is that if you make money doing other activities which are a direct result of your spreadbetting then it is all taxable. as an example if you do nothing but spreadbet then you are tax free, however if you g on to write a book about it and get it published then you are taxable on your earning from the book and your spreadbetting as you are now arrying on a trade.

in this case the trade would be of 'selling books on the back of your spreadbetting success'

Interesting interpretation.

What about all these people like Vince Stanzione and the like who openly admit to making millions by using 'tax free spreadbetting'? They use their implied success to punt out courses / seminars / subscription newsletters and the such. This appears to fall directly into the criteria which you have laid out?? The suggestion is that these people will now have to pay tax on future winnings? In fact some of these guys have been punting stuff for years - is it all going to be taxable?

Steve.

 

[Vaco]

Interesting interpretation.

What about all these people like Vince Stanzione and the like who openly admit to making millions by using 'tax free spreadbetting'? They use their implied success to punt out courses / seminars / subscription newsletters and the such. This appears to fall directly into the criteria which you have laid out?? The suggestion is that these people will now have to pay tax on future winnings? In fact some of these guys have been punting stuff for years - is it all going to be taxable?

Steve.

Yes, it would all be taxable as I understand it, but seriously if you were making 'millions' spreadbetting would you really be tryiying to punt out courses/seminars and such?

I wouldn't but hey i'm selfish like that.

 

[stevespray]

Yes, it would all be taxable as I understand it, but seriously if you were making 'millions' spreadbetting would you really be tryiying to punt out courses/seminars and such?

I wouldn't but hey i'm selfish like that.

But it's the irony of the situation. Most of the snake oil salesmen make big boasts about their returns from betting in their sales pitches - If I were a tax inspector I'd be sending out a few bills based on what I was reading!! :cheesy:

Steve.

 

[Vaco]

But it's the irony of the situation. Most of the snake oil salesmen make big boasts about their returns from betting in their sales pitches - If I were a tax inspector I'd be sending out a few bills based on what I was reading!! :cheesy:

Steve.

No the irony is that they can probably offset their spreadbetting losses against the profits they make selling junk!

 

[Hoggums]

Interesting interpretation.

What about all these people like Vince Stanzione and the like who openly admit to making millions by using 'tax free spreadbetting'? They use their implied success to punt out courses / seminars / subscription newsletters and the such. This appears to fall directly into the criteria which you have laid out?? The suggestion is that these people will now have to pay tax on future winnings? In fact some of these guys have been punting stuff for years - is it all going to be taxable?

Steve.

Simple answer - NO - BECAUSE THESE GUYS HAVE NEVER MADE ANY MONEY ON THE MARKETS

 

[stevespray]

Simple answer - NO - BECAUSE THESE GUYS HAVE NEVER MADE ANY MONEY ON THE MARKETS

But they say they've made millions? Surely they cant be telling porkies?



Steve.

 

[BPS1]

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

CityTrader did you get a ruling, everyone, every site has a different view. What if you do get a letter from inland revenue asking what has happened to your income over the last tax year, do you simply state "I am unemployed" is that a lie?

 

[£10kLoser]

I see your a long time member since Jan 2003, have a look around the boards, its been done to death.

Short answer and correct one is for U.K residents only:

You dont pay tax on winnings from gamblinng, spreadbetting is gambling and therefore not taxable, no matter how much it is, you dont pay tax on a million from the lottery and you dont pay tax on a poker night with friends.

No income or capital gains, its on every spreadbet website which is governed by U.K law and monitored by the F.S.A. Unless your a 'proffessional' which only implies that you do it as a business and are registered as so. Individuals dont pay tax or recieve tax breaks on wins/losses.

Correct, but everyone here wants to believe in a dark side to trading. Brokers that rip you off, spread betting is taxable, you'll lose your money if a SB co goes broke, etc., etc, etc.

Is it any wonder that with this negative attitude most traders lose?

Jesus guys, Trade2win is full of doom and gloom but I live a life of ease and comfort in the sun and don't pay any tax. Of course, you doom mongerers will have some crap to say about that, no doubt.

Stop looking for the downsides and concentrate on making money instead...

 

[new_trader]

Jesus guys, Trade2win is full of doom and gloom but I live a life of ease and comfort in the sun and don't pay any tax. Of course, you doom mongerers will have some crap to say about that, no doubt.

Too much sun can lead to a malignant melanoma.

 

[blancspa]

let me be clear

Too much sun can lead to a malignant melanoma.

is that the end?

 

[artsbound]

Capital Spreads - Financial Spread Betting Explained have this to say on their website....

All spread betting profits are recognised as the winnings of a bet, and are therefore free of Capital Gains and Income Tax.

still, I am unclear this subject. Specially after hearing that some people do pay Income tax on winnings from SB.

 

[Vaco]

Capital Spreads - Financial Spread Betting Explained have this to say on their website....

All spread betting profits are recognised as the winnings of a bet, and are therefore free of Capital Gains and Income Tax.

still, I am unclear this subject. Specially after hearing that some people do pay Income tax on winnings from SB.

if your not making more then 10k a year from your trading, stop stressing you dont need to worry about it.

 

[happytraveldog]

Hi Guys,

I am pretty clear in the Income Tax thread......where does this leave UK Spread bettors that derive their sole income from Spread betting with regard to paying NI? Do we need to register as Self -employed and then pay the weekly rate of £2.30??

Any advice would be greatly appreciated. Thanks.

Andy

 

[eclemons]

I used to work for professional gamblers and they never paid tax. However I can settle this debate for once and all in the new year as I am currently being investigated by the IR. So I will let you know what happens. If my betting profits are taxed then I will go to court to get a ruling if I lose and go broke in the process then I don't care because I will make such a big fuss about it that the IR wished they had never knocked on my door.

Can you keep me posted of outcome please.

 

[pokerpro]

Hello guys, i am a poker pro living in uk and just discovered spread betting, my only source of income until now is poker (havent had the time to lose money at spread betting yet )

I already spent some time searching for the poker pro situation and concluded that my poker winnings were tax free (no real doubt on that).

I have seens few relevant links to the hmrc site on this forum previously mentionned:
BIM22010 - Trade: exceptions & alternatives: illegal activities: what is a trade?
http://www.hmrc.gov.uk/manuals/bimmanual/BIM20210.htm

BIM22015 - Trade: exceptions & alternatives: betting and gambling: introduction
http://www.hmrc.gov.uk/manuals/bimmanual/BIM22015.htm

BIM22016 - Trade: exceptions & alternatives: betting and gambling: what is a bet?
http://www.hmrc.gov.uk/manuals/bimmanual/bim22016.htm

BIM22018 - Trade: exceptions & alternatives: betting and gambling: organised activity
http://www.hmrc.gov.uk/manuals/bimmanual/bim22018.htm

BIM22019 - Trade: exceptions & alternatives: betting and gambling: element of existing trade
http://www.hmrc.gov.uk/manuals/bimmanual/BIM22019.htm

BIM22020 - Trade: exceptions & alternatives: betting and gambling: spread betting
http://www.hmrc.gov.uk/manuals/bimmanual/BIM22020.htm


But i think that you missed one very important page of the HMRC website, which specificaly deals with the case of the "only source of income"
BIM22017 - Trade: exceptions & alternatives: betting and gambling: the professional gambler
http://www.hmrc.gov.uk/manuals/bimmanual/BIM22017.htm

Enjoy

 

[Waterfield]

Plenty of ways around that though.

Phil.