Trading from home - employment status.

[new_trader]

How many of you have sought advice from an accountant regarding this issue of taxation? How many of you have bothered to read the HMRC guidelines about this subject? The answer is simply very few as is obvious from some of the posts.

Spreadbetting is gambling which is tax free and not tax deductible. The only individuals/companies that are liable for taxation are those that are deemed to be 'Professional' or are vendors of products/courses that take positions in order to demonstrate the workings of those products or enhance their reputations as good teachers.

The level of proficiency or good fortune in the markets is not a determining factor in being a 'Professional' in the eyes of the law or HMRC. An individual who is proficient/lucky enough to make a profit in excess of £1million is not a 'Professional' and will not incur a tax bill even if that is the sole source of income.

There have not been any cases brought by the Inland Revenue in order to get anyone to hand over tax on gambling profits where they do not deem the individual to be a professional. The fixation with this topic is baffling and what is sad is that it almost seems like turkeys asking for Christmas. Beware as your wishes may eventually come true.

LION63,

Let me see if I understand what you are saying correctly. Two people, lets say twins, identicle in every way including ability, attend a trading seminar and learn a particular trading style. They both open a trading account, the only difference being that Twin A opens a Spread Betting account and Twin B opens a Direct Access account. They trade side by side and call out each trade to ensure that they are both taking EXACTLY the same trades at EXACTLY the same time. At the end of the year, they have both made £1Million. Now, Twin A gets to enjoy every single penny of that £1Million, but Twin B must share a percentage with the HMRC. Next year, learning from his mistake, Twin B opens a Spread Betting account and by the end of the year has made another £1million. When the IR asks for their share he says "No, not this time. I did it all through spread betting" What you are saying is that the IR's response will be, "We're sorry, we thought you made it trading. No problem, you enjoy it all."

 

[LION63]

LION63,

Let me see if I understand what you are saying correctly. Two people, lets say twins, identicle in every way including ability, attend a trading seminar and learn a particular trading style. They both open a trading account, the only difference being that Twin A opens a Spread Betting account and Twin B opens a Direct Access account. They trade side by side and call out each trade to ensure that they are both taking EXACTLY the same trades at EXACTLY the same time. At the end of the year, they have both made £1Million. Now, Twin A gets to enjoy every single penny of that £1Million, but Twin B must share a percentage with the HMRC. Next year, learning from his mistake, Twin B opens a Spread Betting account and by the end of the year has made another £1million. When the IR asks for their share he says "No, not this time. I did it all through spread betting" What you are saying is that the IR's response will be, "We're sorry, we thought you made it trading. No problem, you enjoy it all."

YES.

 

[charliechan]

lion - but if they trade at the same time etc, they wont get the same price. trader a will always pay a larger spread so will not make as much. he will also suffer more 'spikes' etc. added up, those losses could well compete with paying tax.

 

[LION63]

lion - but if they trade at the same time etc, they wont get the same price. trader a will always pay a larger spread so will not make as much. he will also suffer more 'spikes' etc. added up, those losses could well compete with paying tax.

We are not going to do this dance.

 

[donaldduke]

LION63,

Let me see if I understand what you are saying correctly. Two people, lets say twins, identicle in every way including ability, attend a trading seminar and learn a particular trading style. They both open a trading account, the only difference being that Twin A opens a Spread Betting account and Twin B opens a Direct Access account. They trade side by side and call out each trade to ensure that they are both taking EXACTLY the same trades at EXACTLY the same time. At the end of the year, they have both made £1Million. Now, Twin A gets to enjoy every single penny of that £1Million, but Twin B must share a percentage with the HMRC. Next year, learning from his mistake, Twin B opens a Spread Betting account and by the end of the year has made another £1million. When the IR asks for their share he says "No, not this time. I did it all through spread betting" What you are saying is that the IR's response will be, "We're sorry, we thought you made it trading. No problem, you enjoy it all."

Change this slightly:
Lets say in year two Twin B make a million in his self select ISA account instead. (Say its 1999!)
Are the HMRC going to want a cut of that? No they would be laughed out of court.

 

[Lee Shepherd]

Wow, Gotta laugh.

It's the law of the land.

Betting is not taxable.

Great posts Lion, I'd just about given up on these people.

Hey you know what, I'm starting to believe that gambling is taxable and that I should be paying more into this great country of ours than is neccessary.

The more taxes you pay the better off the government is. The better the hospitals become for me, more police to protect me and more military to defend our great nation and allow me to sleep safe at night and trade all day.

Spread betting is taxable and you should pay your taxes. Ring up the inland revenue and tell them your going to pay them money whether they like it or not.

 

[dcetrader]

haha, i am a bank dealer, i trade stocks and futures at home in freetime.

 

[Lee Shepherd]

ehh...I'm a sewage consultant, i trade in my freetime.

Whats your post got to do with the price of coffee.

 

[LION63]

haha, i am a bank dealer, i trade stocks and futures at home in freetime.

When did spread betting become tax free in China? Many members on these boards have other occupations but does that mean that they are not good traders?

 

[new_trader]

Many members on these boards have other occupations but does that mean that they are not good traders?

What do you think?

 

[counter_violent]

S B companies I presume pay their taxes on profits...given that 95% of punters with these firms lose....someone somewhere must have figures, why would the revenue be interested in persuing individuals and all the hassle that entails, when they can simply collect at source.

 

[nkruger]

S B companies I presume pay their taxes on profits...given that 95% of punters with these firms lose....someone somewhere must have figures, why would the revenue be interested in persuing individuals and all the hassle that entails, when they can simply collect at source.

I do agree with your point CV, but I don't think it's as simple as that. They are really just city based bookies, that have an elaborate 'book' (platform) on the comings and goings of the world's financial markets. For betting to be tax free, I always understood you paid the betting tax at the time of the bet ( "£1 each way on red rum tax paid please guv'nor" ) so is it correct that the SB companies pay our betting tax out of the spread that we pay ? Might post that as a question on the Cap Spreads thread and see what Simon comes up with.

Anyway, the reason for my rant this afternoon is I've just been to my local Tax Office to have an argument about some tax I don't think I owe (from a couple of years back) While I was there, I enquired about my tax situation if I was ( "theoretically you understand, Mr Taxman" ) to have a flutter on the markets via spreadbetting and he said the same as I've been told on the phone ~ betting is not taxable ( lottery etc. ) I said "excellent" and he immediately retracted his statement and said someone would contact me in the near future to 'clarify the situation' I hasten to add, I did not tell him that would be my sole source of income, although I do have 3 properties that I rent out but the earnings from those are negligible for the next 5 years until the rents are more than double their present amount.

So still no nearer an answer.

But I did get £4500 back off the Revenue :clap:

Have a good Easter break everyone

NK

 

[counter_violent]

For betting to be tax free, I always understood you paid the betting tax at the time of the bet ( "£1 each way on red rum tax paid please guv'nor" ) so is it correct that the SB companies pay our betting tax out of the spread that we pay ? Might post that as a question on the Cap Spreads thread and see what Simon comes up with.


NK

Ah, not quite what I had in mind.

Years ago there were Two options ...placing bets and placing bets (tax paid)...tax paid option was an additional charge on top of the bet amount, with any winnings tax free.

I think that system was scrapped at the time govt decided that all betting would be tax free.

If memory serves me, govt/tax office must have decided that to simplify the system was more beneficial to them on overall tax take and administration cost.

So back to the point....if tax is taken from the S B firms on profits (not spread) then would it really be worthwhile chasing individuals around !!

:smart: Must be easier to hit a static target.:whistling

 

[timm]

For betting to be tax free, I always understood you paid the betting tax at the time of the bet ( "£1 each way on red rum tax paid please guv'nor" ) so is it correct that the SB companies pay our betting tax out of the spread that we pay ? Might post that as a question on the Cap Spreads thread and see what Simon comes up with.

Betting duty was abolished in 2001 and replaced with a tax on gross profits paid by the bookmaker. For financial spreadbets, the bookmaker pays 3% of gross profits as tax. That is why spreadbetting is tax free for the punters. 3% of all the spreadbetting losses is a much better deal for the government than trying to tax the winners.

HM Revenue & Customs: C&E 1 - General Betting Duty Abolished

 

[nkruger]

Betting duty was abolished in 2001 and replaced with a tax on gross profits paid by the bookmaker. For financial spreadbets, the bookmaker pays 3% of gross profits as tax. That is why spreadbetting is tax free for the punters. 3% of all the spreadbetting losses is a much better deal for the government than trying to tax the winners.

HM Revenue & Customs: C&E 1 - General Betting Duty Abolished

Thanks for the link Timm, I've just printed out to take with me, the next time I have to go to the Rev & Cuss. Seems fairly conclusive to me. Betting is 'Tax Free'

Thanks for your squirrelling around