Trading from home - employment status.

[lurkerlurker]

Just one point. If you made your life out of spreadbetting, the inland revenue can tell you that if this is your main income you have to trade thru a business and therefore you will be liable to pay taxes. But obviously, ask to an expert. It's always to be in the system and to operate thru a company. You will do your NI contributions, your bank will give you loans, etc.

CatTrader - I suppose they could tell you that, but anyone further up the daisy chain in the HMRC isn't going to pursue any recovery against you. It's simply gambling. The amount does (should?) not make a difference. SB gains are not chargable to IT or CGT. If I take £500 a week out of the markets through spreadbetting, and I do this for a year, and make £20k, that is not income or capital gains - its gambling. I would be technically unemployed (although not entitled to benefits because I would not be actively seeking work, and would have assets > £5k).

See the HMRC entry on Professional Gambing and also their take on financial spread betting - feel free to ignore their comment on the "economic significance" - betting is betting. £10 from the horses is as untaxable as £60m on the EuroLottery.

I am not a lawyer, tax professional etc. The above is merely a statement of opinion and does not constitute financial or legal adivce.

 

[nkruger]

I have a letter from IR stating that my earnings free from CG and Income Tax and at the moment pay voluntary NI payments. I consider myself a Professional Trader and self employed - just my earnings are not taxable (not my fault, just the way it is)
The only problem you have is trying to get proof of earnings for mortgage purposes.

Hi Pringle. Hope it's still going ok. I would like to have, also, a letter from the IR stating my earnings are free from Income Tax. Was this easy to do ? Regarding my earnings - I have spoken to my accountant ( I had a business before I did this full-time) and he thinks the best way round is to produce a profit/loss account based on my bank account and statements from the 3 spreadbet companies I use. They will show how much I've earnt even though should not (?) be taxed. Banks and building societies should accept this, together with a covering letter from said bean-counter.

 

[nkruger]

" BIM22017: The fact that a taxpayer has a system by which they place their bets, or that they are sufficiently successful to earn a living by gambling does not make their activities a trade"

Found this (thanks LL) on the Inland Revenue site - seems fairly conclusive ??

 

[lurkerlurker]

" BIM22017: The fact that a taxpayer has a system by which they place their bets, or that they are sufficiently successful to earn a living by gambling does not make their activities a trade"

Found this (thanks LL) on the Inland Revenue site - seems fairly conclusive ??

Absolutely! I would think so in the vast majority of cases.

 

[police]

This is an important point of technical law that should be noted. It is true gambling as such is tax free. However, if you are perceived to be a Professional Gambler, you are liable to pay income tax on the net result of your earnings. This is true whether you play poker, bet on horses or on the FTSE 100. The grey area, as always, is how is that distinction drawn by the inland revenue.

 

[nkruger]

This is an important point of technical law that should be noted. It is true gambling as such is tax free. However, if you are perceived to be a Professional Gambler, you are liable to pay income tax on the net result of your earnings. This is true whether you play poker, bet on horses or on the FTSE 100. The grey area, as always, is how is that distinction drawn by the inland revenue.

That seems contrary to my post (above) extracted from the IR website though. They say that if I am lucky enough to have a system that earns me a sum of money, it is not carrying on a trade, so therefore not liable to tax.

 

[LION63]

This is an important point of technical law that should be noted. It is true gambling as such is tax free. However, if you are perceived to be a Professional Gambler, you are liable to pay income tax on the net result of your earnings. This is true whether you play poker, bet on horses or on the FTSE 100. The grey area, as always, is how is that distinction drawn by the inland revenue.

An individual that profits from speculation is not deemed a Professional Gambler because of his percentage wins or financial gains. A Professional is an individual who is gainfully employed in the industry and uses this knowledge to make profits. A seller of systems and or courses that enable others to profit from speculation who speculates in order to prove that these systems or courses work is also deemed to be a Professional Gambler.

No matter how profitable an individual gambler may be he/she cannot be taxed by the Inland Revenue regardless. There have not been any test cases in the courts to show otherwise and until the Revenue bring such a case (very unlikely) and win, it is pointless worrying about it. UK residents do not worry about the next volcanic eruption.

 

[nkruger]

No matter how profitable an individual gambler may be he/she cannot be taxed by the Inland Revenue regardless. There have not been any test cases in the courts to show otherwise and until the Revenue bring such a case (very unlikely) and win, it is pointless worrying about it. UK residents do not worry about the next volcanic eruption.

As has been pointed out before, if the IR taxed winnings, the 90% of people who lose would be able to claim their losses against their tax bill........ 😴

 

[bolts]

Tell them your a House Husband 🙂

 

[new_trader]

As has been pointed out before, if the IR taxed winnings, the 90% of people who lose would be able to claim their losses against their tax bill........ 😴

Sounds about right. The IR taxes profits, that's the way it works in any business venture. I am not a tax expert but I tend to agree with what police says. If you earn a living doing anything full-time then technically it is your profession and liable to income tax. You're a full time spread-better aren't you? Have you spoken to a professional accountant about your situation or are you just hoping you are right through your interpretation of the IR website? I take it you haven't by the way you say 'IF'.

 

[Lee Shepherd]

Spread betting as a trade is gambling. Thats it. Gambling is not taxable under current U.K law.

Spread 'BETTING', the clues in the title.

 

[CityTrader]

This is an important point of technical law that should be noted. It is true gambling as such is tax free. However, if you are perceived to be a Professional Gambler, you are liable to pay income tax on the net result of your earnings. This is true whether you play poker, bet on horses or on the FTSE 100. The grey area, as always, is how is that distinction drawn by the inland revenue.

Where is the case law precedent or Tax statute that says a professional gambler who gambles by placings bets on stock prices is liable to pay tax on his winnings???

 

[Lee Shepherd]

I agree with CityTrader here and of course...The Tax man.

Put any credible evidence to say that you have to pay taxes on your gambling (under U.K legislation).

You wont find any. If in doubt, check the inland revenue out.

Gambling is not taxable under current U.K legislation. You do not have to pay income tax on gambling. Gambling is not taxable. Spreadbetting is gambling, therefore not taxable. Spreadbetting is not an income. Incomes are taxable, winnings are not.

Any way you put it sounds the same.

 

[theroguetrader]

I agree with CityTrader here and of course...The Tax man.

Put any credible evidence to say that you have to pay taxes on your gambling (under U.K legislation).

You wont find any. If in doubt, check the inland revenue out.

Gambling is not taxable under current U.K legislation. You do not have to pay income tax on gambling. Gambling is not taxable. Spreadbetting is gambling, therefore not taxable. Spreadbetting is not an income. Incomes are taxable, winnings are not.

Any way you put it sounds the same.

BRILLIANT comment there by yourself and city trader ....... !!

HMRC - are just USELESS idiots - (if ANY of the jobs worths who work there were capable of " independant thought " - they would perhaps learn how to trade and make REAL MONEY - as opposed to being stuck in that pathetic little taxation world they all live in) - (on a fiver an hour) -
There ALL like robots..... !! " we cannot deviate from the manual " ....!!

you could have 10m in a spread " betting " account - and they cant TOUCH A PENNY... !!
(they could have a Test Case of course) - and loose that too -

😛

 

[nine]

I had to pay tax on my spreadbetting --- in Australia.

The tax man's argument was "if you are making a large number of bets and a consistent income then you are running a business not gambling."

 

[theroguetrader]

I had to pay tax on my spreadbetting --- in Australia.

The tax man's argument was "if you are making a large number of bets and a consistent income then you are running a business not gambling."

NO WAY - REALLY....? that is RIDICULOUS........ !!:-0:-0 -

can i ask..? how did you get round that problem..?

 

[LION63]

I had to pay tax on my spreadbetting --- in Australia.

The tax man's argument was "if you are making a large number of bets and a consistent income then you are running a business not gambling."

It is TAX FREE for UK residents and this does not apply to other countries.

 

[CityTrader]

I had to pay tax on my spreadbetting --- in Australia.

The tax man's argument was "if you are making a large number of bets and a consistent income then you are running a business not gambling."

Australia? FFS what on earth has that got to do with anything?? It's illegal to have homosexual sex in some obscure counties in rural America- does that mean we should apply the same law here? Australia is a financial backwater. .. It's totally irrelevant.

 

[Lee Shepherd]

If you sacrifice a goat and do not share it with your neighbour you can be killed and eating by your brothers.

Bongawonga tribe in the rainforest. Whats that got to do with anything but thought relevant in a wierd sense of some other posts. LOL

The discussion is about spread betting in the U.K and U.K law hence the posts containing spread betting under U.K law and current U.K legislation.

I do not know nor need to know the laws of other countries regarding my business here in the U.K and feel this is possibly where people in the U.K are getting themselves confused.

They ask if spread betting is taxable in england and someone posts yes, but they are in a different country. The British citizen then thinks spreaad betting is taxable and then tells others, and around the misinformation go's.

Spread Betting is not taxable under current U.K legislation. Nor capital gains tax as well as income tax. In fact no tax at all, put simply, what you make is what you take. It's all yours.

Now lets earn some tax free money. (providing your permanent resident in the U.K of course)

 

[Bagehot]

If you sacrifice a goat and do not share it with your neighbour you can be killed and eating by your brothers.

Bongawonga tribe in the rainforest. Whats that got to do with anything but thought relevant in a wierd sense of some other posts. LOL

The discussion is about spread betting in the U.K and U.K law hence the posts containing spread betting under U.K law and current U.K legislation.

I do not know nor need to know the laws of other countries regarding my business here in the U.K and feel this is possibly where people in the U.K are getting themselves confused.

They ask if spread betting is taxable in england and someone posts yes, but they are in a different country. The British citizen then thinks spreaad betting is taxable and then tells others, and around the misinformation go's.

Spread Betting is not taxable under current U.K legislation. Nor capital gains tax as well as income tax. In fact no tax at all, put simply, what you make is what you take. It's all yours.

Now lets earn some tax free money. (providing your permanent resident in the U.K of course)

You're right in general, but not exclusively so. IR have considerable flexibility in interpretation of rules, and I have first hand experience in this, in a particular area where they seemed to make up rules on a case by case basis (as far as I could see it wa determined by how likely you were to take legal action against them). But they can apply flexibility in spreadbetting too. Before you bang on about my 'flag' making my comment irrelevant, I have paid tax in the UK related to previous employment. A while ago I was facing a significant CGT bill. As there was a forex element, I'd hedged this out with a EUR/GBP position put in place with a spreadbet company. This ended up moving against me and I took a loss. After discussion with HMRC they allowed me to offset the spreadbet loss against the capital gain, after I argued that the position had been taken not as a 'gamble' or speculatively but as a deliberate hedge against the capital position. They accepted this and allowed me to reduce my tax bill accordingly. It seems to me that if they can interpret spreadbet gains/losses flexibly in this case, then they can do so elsewhere.

There is one other point - if you read any of the case notes from HMRC on avoidance, there has been a very important policy shift over the last couple of years. They have moved away from a 'literalist' interpretation of their rules towards one of 'intent'. So if they feel that a tax arrangement works against the 'spirit' of their legislation they can go after an individual for avoidance even if the arrangement obeys the letter of their rules (ie a loophole).

For 99% of traders on this website I would agree that this is irrelevant and to all intents and purposes spreadbetting is not taxable, but my personal experience demonstrates that this is not universally so, and traders making significant profits from spreadbetting should be a bit careful about how they interact with HMRC.