Tax & spreadbetting, for full-time, sole source of income traders

[Pippppin]

roguetrader..

my point is that "sole" traders, or self-employed people in general, you have to set aside much more of your income in order to provide many of the financial benefits that those employed in decent jobs have as of right

if you are making a decent income from spreadbetting, comparable to the salary you are earning in a comparably paid job, you should seek to pay considerably less income tax than you would in the comparable job since you have far few benefits (sick pay, pension, holiday pay, redundancy etc), and thus you have to make up the shortfall

 

[Visaria]

I do, I pay 17.5% VAT on almost everything I buy, I also pay a substantial wedge to my council each month for providing local services. More than half of the money I pour into my petrol tank each week also goes to HMRC in fuel duty, as does a large proportion of my expenditure on beer and wine. I also pay income tax on interest earned on the balance of my account that is in cash at any time. When I die, they will also take a sizeable sum in IHT. If I prefer to minimise my exposure to one tax in particular, and it is legal to do so, I have no moral dilemma there!

First rate post - also bookies (including spreadbetting companies) are subject to either gambling duties/levies or taxed more heavily than normal companies ( I can't recall). So taxing a pro gambler is just taking two lots of taxes.

My own personal view is that taxation is just legalised theft.

Anyway, it's well enshrined in case law that a UK citizen has every right (and perhaps even obligation) to minimise his/her liability to tax as long as it is done within the confines of the law.

 

[swissgold]

First rate post - also bookies (including spreadbetting companies) are subject to either gambling duties/levies or taxed more heavily than normal companies ( I can't recall). So taxing a pro gambler is just taking two lots of taxes.

My own personal view is that taxation is just legalised theft.

Anyway, it's well enshrined in case law that a UK citizen has every right (and perhaps even obligation) to minimise his/her liability to tax as long as it is done within the confines of the law.

I agree

 

[roguetrader]

My own personal view is that taxation is just legalised theft.

ROFL Visaria, have to say that I find that a tad strong in general. I see nothing wrong with tax as long as it is applied fairly and reasonably.
My own grievence with taxes is that there is a lack of clarity, too many stealth taxes, and when you sit down and start to calculate exactly what you are paying in taxes you can see why, as the total figure is quite shocking, having lived without tax for a number of years it's quite a wake up call to come back to it.

 

[roguetrader]

roguetrader..

my point is that "sole" traders, or self-employed people in general, you have to set aside much more of your income in order to provide many of the financial benefits that those employed in decent jobs have as of right

if you are making a decent income from spreadbetting, comparable to the salary you are earning in a comparably paid job, you should seek to pay considerably less income tax than you would in the comparable job since you have far few benefits (sick pay, pension, holiday pay, redundancy etc), and thus you have to make up the shortfall

Ok I see what you are saying, however that largly relates to incorrect comparisons between pay. For example lets say I am working as whatever with a salary before tax of 40K a year plus all my benefits that you mentioned, and from your trading as a "sole trader" you make 40K a year, then you are simply not earning as much as me, all the benefits you mention such as private medical, paid leave, are a part of my salary, they have a monetary value and must be added to my cash total to find my real salary. If you want sick pay, pay National Insurance, he does, if you want a pension pay for it. he does. Redundancy, I give ya, since I'm not sure where that comes from. If you are puting money aside for healthcare, pension etc, which you should then you get tax relief on that. It's a stretch tosay you shouldn't pay taxes cause you have no perks, give your boss a kick up the ass and tell him to sort the perks out

 

[Visaria]

ROFL Visaria, have to say that I find that a tad strong in general. I see nothing wrong with tax as long as it is applied fairly and reasonably.
My own grievence with taxes is that there is a lack of clarity, too many stealth taxes, and when you sit down and start to calculate exactly what you are paying in taxes you can see why, as the total figure is quite shocking, having lived without tax for a number of years it's quite a wake up call to come back to it.

You can't have a tax which is fair and reasonable to all.

 

[roguetrader]

You can't have a tax which is fair and reasonable to all.

Probably not, since "fairness" is a relative concept, and often times a matter of opinion

 

[chump]

"ROFL Visaria, have to say that I find that a tad strong in general. I see nothing wrong with tax as long as it is applied fairly and reasonably".....the levyng of tax becomes less onerous in direct relation to the perceived value obtained from the manner in which the levied tax is put to use.....that is, the more you believe govt is a blackhole for endless waste the less likely you are to want to put any of your hardearned into that hole by way of tax. On the current basis I think I can get more value of each pound than the govt. and I am very unbiased on this topic

 

[swissgold]

Time to abolish income tax, inheritance tax and council tax. Reform the capital gains tax and introduce a local sales tax. Accumulated capital and money thrown out of the window should be taxed, not dead people.

 

[Jbat001]

I do, I pay 17.5% VAT on almost everything I buy, I also pay a substantial wedge to my council each month for providing local services. More than half of the money I pour into my petrol tank each week also goes to HMRC in fuel duty, as does a large proportion of my expenditure on beer and wine. I also pay income tax on interest earned on the balance of my account that is in cash at any time. When I die, they will also take a sizeable sum in IHT. If I prefer to minimise my exposure to one tax in particular, and it is legal to do so, I have no moral dilemma there!

I agree, but I think you're (maybe) being slightly disingenious. Income tax is, after all, the single largest draw on the cash you will accumulate over the course of a lifetime (even IHT can't touch it). While a few clever people (possibly even ourselves) may avoid paying income tax, if everyone did it, we'd have no economy, and therefore no SB companies either, so there must be a case, at least in principle, for paying primary, rather than simply elective taxes.

 

[swissgold]

I agree, but I think you're (maybe) being slightly disingenious. Income tax is, after all, the single largest draw on the cash you will accumulate over the course of a lifetime (even IHT can't touch it). While a few clever people (possibly even ourselves) may avoid paying income tax, if everyone did it, we'd have no economy, and therefore no SB companies either, so there must be a case, at least in principle, for paying primary, rather than simply elective taxes.

What's interesting is those who have seen their wealth increase the most have seen their tax burden decreased the most.

 

[Jbat001]

What's interesting is those who have seen their wealth increase the most have seen their tax burden decreased the most.

That's probably true in just about every society at the moment - depressing for the masses, exciting for a few people. Did you know that Warren Buffett is opposed to tax cuts for the rich?

 

[Visaria]

I agree, but I think you're (maybe) being slightly disingenious. Income tax is, after all, the single largest draw on the cash you will accumulate over the course of a lifetime (even IHT can't touch it). While a few clever people (possibly even ourselves) may avoid paying income tax, if everyone did it, we'd have no economy, and therefore no SB companies either, so there must be a case, at least in principle, for paying primary, rather than simply elective taxes.

Taxes hinder economies by stifling growth. Resources, in the form of tax money, being paid to an entity (the government) that doesn't actually produce anything, could have been used productively elsewhere rather than on the whim of a wasteful government.

 

[Jbat001]

Taxes hinder economies by stifling growth. Resources, in the form of tax money, being paid to an entity (the government) that doesn't actually produce anything, could have been used productively elsewhere rather than on the whim of a wasteful government.

Ah, the libertarian argument. :cheesy:

While it's true that we are obliged to fund an entity called 'government' that is ultimately unproductive, it does serve a very useful purpose. The first duty of government is to protect its citizens, yes?

Without a government, crime would become even more rampantly dog-eat-dog than it is today. Not to say that we'd have anarchy, but we'd certainly have a very brutal situation, with not even a ghost of representation, independent judiciary, armed forces to protect us from being invaded by some tinpot tyrant overseas, etc. No taxes, and there's no Department of Defence, no money to fund an army, no money to support to those unable to work (not dole scroungers), so civil unrest would explode. We couldn't pay our international debts, so the country would quickly go bankrupt.....The list goes on.

While I concede that we might (might) be able to survive in the absence of a government, without some means of gathering taxes, we'd have a privately-run police state, as the rich would have no-one left to prevent them running the show by their rules.

 

[Visaria]

Ah, the libertarian argument. :cheesy:

While it's true that we are obliged to fund an entity called 'government' that is ultimately unproductive, it does serve a very useful purpose. The first duty of government is to protect its citizens, yes?

Without a government, crime would become even more rampantly dog-eat-dog than it is today. Not to say that we'd have anarchy, but we'd certainly have a very brutal situation, with not even a ghost of representation, independent judiciary, armed forces to protect us from being invaded by some tinpot tyrant overseas, etc. No taxes, and there's no Department of Defence, no money to fund an army, no money to support to those unable to work (not dole scroungers), so civil unrest would explode. We couldn't pay our international debts, so the country would quickly go bankrupt.....The list goes on.

While I concede that we might (might) be able to survive in the absence of a government, without some means of gathering taxes, we'd have a privately-run police state, as the rich would have no-one left to prevent them running the show by their rules.

Government protecting citizens? What a radical idea! Perhaps one should cast their mind back to 9-11.

Ghost of representation? Most of the UK's pop was against the invasion of Iraq.

International debts? We wouldn't have any, the government through its lack of spending control is the sole cause of debt.

Privately run police state? We already have that, the government runs it.

:cheesy:

Edit: BTW, the UK did go bankrupt in the '70s and had to be bailed out by the IMF - who do you think was responsible?

 

[roguetrader]

Ultimately you and I, and all the other citzens of the UK, we elect them.

who do you think was responsible?

 

[stevespray]

If you cease to be both resident and ordinarily resident, you are outside the scope of UK capital gains tax, even on UK assets. There is for example no "reciprocal tax agreement" between the Bermuda island goverment and the UK. In Bermuda there is no income tax, capital gains tax, VAT, sales or use tax or wealth tax. Annual government fees are imposed on businesses and there is a payroll tax. Local businesses must be controlled by Bermudians but offshore operations take place through 'exempt' or 'permit' companies.

I'm not sure that is entirely correct. I think that the government introducted somekind of 5 year 'cooling off' period for CGT. They realised that too many people were placing their capital gains into one tax year and then living abroad for a year or so to avoid paying. The upshot was that you ended up having to live abroad for about 5 years to avoid the CGT.

The clever people dont look for countries who arent part of the reciprocal tax agreement - they look for countries that are members but have very low rates of taxation. Under the agreement once you have paid tax on a sum of money it can not be taxed again.

Steve.

 

[Jack o'Clubs]

I'm not sure that is entirely correct. I think that the government introducted somekind of 5 year 'cooling off' period for CGT. They realised that too many people were placing their capital gains into one tax year and then living abroad for a year or so to avoid paying. The upshot was that you ended up having to live abroad for about 5 years to avoid the CGT.

The clever people dont look for countries who arent part of the reciprocal tax agreement - they look for countries that are members but have very low rates of taxation. Under the agreement once you have paid tax on a sum of money it can not be taxed again.

Steve.

Quite so Steve. If you leave the UK and generate capital gains (from UK assets) while away, then if you return within 5 years you are considered to have been 'temporarily non-resident' and you get hit for the CGT in the year you return (ie as if the disposal had been made in that year).

What is interesting is that a lot of the HMRC guidelines on these issues (ie in its IR20 booklet) are not supported by legal precedent, as I discovered while pursuing some income tax issues relating to residency / non-residency with a specialist accountant. What they are in effect doing is putting forward guidelines which would not be enforceable in law, and challenging the individual to take them to court - in practice of course most 'little people' like me won't take the risk of it somehow backfiring and ending up saddled with vast legal expenses for a tax saving of a few grand.

 

[Jbat001]

Government protecting citizens? What a radical idea! Perhaps one should cast their mind back to 9-11.

Ghost of representation? Most of the UK's pop was against the invasion of Iraq.

International debts? We wouldn't have any, the government through its lack of spending control is the sole cause of debt.

Privately run police state? We already have that, the government runs it.

:cheesy:

Edit: BTW, the UK did go bankrupt in the '70s and had to be bailed out by the IMF - who do you think was responsible?

While your points are interesting, you don't really argue with much of what I said. Whatever the evils of government, no system of protection is 100% effective. As to most of the UK being against the Iraq invasion, we all know that parliamentary democracy in the UK allows us to have representatives, not delegates at Westminster (i.e., we elect them, but we don't directly control their political actions), and for right or wrong, we have little day-to-day control in any case.

The British public has shown itself brilliantly capable of running up trillions of pounds of personal and mortgage debt in the last few years - and that's with an independent BOE!


I fear we're going off topic, but I still maintain that we can't have a viable state without income tax!

 

[swissgold]

I'm not sure that is entirely correct. I think that the government introducted somekind of 5 year 'cooling off' period for CGT. They realised that too many people were placing their capital gains into one tax year and then living abroad for a year or so to avoid paying. The upshot was that you ended up having to live abroad for about 5 years to avoid the CGT.

The clever people dont look for countries who arent part of the reciprocal tax agreement - they look for countries that are members but have very low rates of taxation. Under the agreement once you have paid tax on a sum of money it can not be taxed again.

Steve.

Why do we have a legal requirement to declare on the tax return any interest we've received from an offshore account if that interest has already been taxed with a 15% retention tax? I've no problem to pay that tax but I can't tolerate a government that wants to get into my personal banking privacy.