Trading from home - employment status.

Lee Shepherd

Senior member
2,164 570
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.
 
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CityTrader

Established member
665 26
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

Senior member
2,164 570
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

Well-known member
407 36
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 -

:p
 

nine

Senior member
2,038 506
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

Well-known member
407 36
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

Established member
746 33
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

Established member
665 26
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

Senior member
2,164 570
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

Member
74 10
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.
 

Lee Shepherd

Senior member
2,164 570
So............????

Spreadbetting is gambling and winnings are not taxable.

Thats it...simple...Doesn't matter how much you win, it's still not taxable, wheter it's £1 or £1 million pound on 'who wants to be a millionaire' or on the horses, regualr basis or a one off. A bet is a bet and a win a win. Gambling is gambling, theres no grey area. Gambling is not taxable. It's not an income.

Lets stop the confusement.

Spread betting in the U.K under current law is not classed as an income and not taxable.

Spread betting is not taxable.

What you win from spreadbetting on the markets is all yours. Not the tax office. All yours.

(currently under U.K legislation)
 

CityTrader

Established member
665 26
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.


Funny, my accountant tells me that it's in the revenues' charter that all tax payers are tread equally and fairly. And here you are saying than can effectively go after individuals on a case for case basis? Almost with a vendetta should they feel the need? Guess I need a new accountant then??
 

new_trader

Legendary member
6,206 1,263
So............????

Spreadbetting is gambling and winnings are not taxable.

Thats it...simple...Doesn't matter how much you win, it's still not taxable, wheter it's £1 or £1 million pound on 'who wants to be a millionaire' or on the horses, regualr basis or a one off. A bet is a bet and a win a win. Gambling is gambling, theres no grey area. Gambling is not taxable. It's not an income.

Lets stop the confusement.

Spread betting in the U.K under current law is not classed as an income and not taxable.

Spread betting is not taxable.

What you win from spreadbetting on the markets is all yours. Not the tax office. All yours.

(currently under U.K legislation)
Lee,

Why would someone trade with a Direct Access account when they can avoid paying taxes trading with a Spread Betting account? Can you explain this?
 

Bagehot

Member
74 10
Guess I need a new accountant then??
Yes, given that when I took on HMRC I hired the UK Head of Personal Taxation from a global firm to present my case (he had a track-record of winning these arguments) and HMRC backed down from their initial position with me. It's quite sweet that you have such faith in the underlying fairness of governments though.
 

CityTrader

Established member
665 26
Lee,

Why would someone trade with a Direct Access account when they can avoid paying taxes trading with a Spread Betting account? Can you explain this?
The costs are greater with Spreadbetting - so you need a larger movement (in the right direction!) to make a profit. For very small profits ( such a day trading where presuemably you are looking for a lot of small profits) a CFD is better as the costs wont eat in your p&l as much, and of course what could be a profit under a lower cost CFD could be a loss in a spreadbet- in which case any tax due would be welcomed!!