Spreadbetting for a friend

jls483

Active member
173 0
I know that spreadbets are tax free.

Let's imagine that I am making a packet with spreadbets and my mate wants a piece of the action.

He doubles the balance of my spreadbet account, I double my stakes and carry on. After a year the account has again doubled and he has to pull out of the scheme to buy a yacht. I give him 45% of the balance of my account and half my stakes, keeping 5% to compensate for all my efforts.

Are the profits that he has made tax free? Is the 5% I took in compensation tax free or is it income and liable for income tax?

Many thanks for any advice.

John.
 

MCGF

Well-known member
339 0
Why worry urself over this?

They aint gonna come after the money realistically are they!
 

jls483

Active member
173 0
What about if I have 25 mates, a million under management and making returns of 20% a year? At some point they are going to start to worry about it.

I also sleep better at night when I fill my tax return in honestly.
I don't jump every time the phone rings or a man in a suit knocks on the door!

John.
 

MCGF

Well-known member
339 0
Why the desperation to give away the money u have earned?

U wanna send in an honest tax return? the people who make up tax laws and collect it are the most dishonest people in the world

Maybe in the 25 mates circumstance u might have cause for concern but if it just one mate and a small percentage ur being a bit daft and making a mountain out of a molehill
 

eminem

Active member
185 1
I think you are tax free in all of this - its your account and what you make in it and what you do with the proceeds is your business (IR tax issues aside). Its your mate that needs to be careful.

There will be a paper trail from him to you and back to him again. He would need to convince the IR that the money trail came by way of gambling profits to avoid and tax and that would involve you but probably not implicate you from a tax perspective. The revenue may argue that your mate had made a capital gain (gave away/invested X and received Y back) and tax him accordingly and your mate would probably be wise to accept that rather than get into a messy fight with the IR (as the IR may probe other aspects of his income)

You on the other hand have an SB account and all profits from it are tax free irrespective of the 5% mangagement charge, there is no need to account for that seperately.

All just my opinion of course ;)
 

MCGF

Well-known member
339 0
I understand his seeking advice-i think tho if he feels the need to keep getting onto authorative bodies in this way hes only going to open up a can of worms for himself
 

jls483

Active member
173 0
ok - the situation is closer to the 25 mates - I just metioned one mate to keep the example simple.

I'm not desparate to give away any of the money that I have earned - but that is the law. Taxes aren't such a bad thing - we'd been in a messy if nobody paid any.

Anyway - this is not a thread about the ethics of taxation - it is a theoretical question about taxes on spreadbets that neither of us seems to have the answer to.

John.
 

MCGF

Well-known member
339 0
Yeah your right

The problem is there is too many rules and regulations which the average person cant understand!
 

Trader333

Moderator
8,640 969
jls483,

You could give the money as a gift which is free from tax as long as you survive for more than 7 years.


Paul
 

MCGF

Well-known member
339 0
Lol-u might need some protection!
 

jls483

Active member
173 0
Thanks Trader333,

I thought there was a limit of about £1000 a year on tax free gifts?

John.
 

Trader333

Moderator
8,640 969
My understanding is that there is no limit as long as you survive 7 years or more but this may have changed.


Paul
 

hellvellen

Newbie
2 0
7 year rule applies to Inheritance Tax not Income or Capital Gains.

Tax is not your biggest problem.

By accepting deposits on behalf of mates (investors) you are breaking very serious Banking laws. Remember spread betting is regulated by FSA and therefore to do what you propose you would also require regulation.

You would also need to segregate client money from your own funds and carry indemnity insurance.

There's more but I trust that is enough for the present.

Hellvellen

(FSA registered financial advisor)
 

ChartMan

Legendary member
5,580 46
Simple solution- get all you mates to open SB accounts, and you hit the buttons on all of them.... that 45% you gave away will be taxable income to the recipient, whether it would be income or a capital gain is a question..
 

peedee

1
341 0
I would have thought that all the money is 'betting' money, betting is tax free, i thought it was that simple. I've read other threads on here about the subject of spread 'betting' and other threads where people are always quoting FSA this FSA that, what i'm trying to say is that surely all these spread 'betting' companies that put so much effort into the 'sales pitch' of 'no tax' would not be able to if it was not authorised by the FSA. PeeDee.
 
 
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