UK Forex accounts held in $$, Eur and ££ - how to tax it?

[Silverring]

I have several Forex accounts in UK (Alpari). I have registered with HMRC as sole trader in UK from 01/2010 but I have travelled a lot and didn’t trade thus there is not much to tax. Nevertheless I have to calculate the tax however small it may be.

I have made most of profit while I was still employed – I understand that this time should be taxed as CGT. And Income tax should be paid since the start of sole trader registration?

I sent initial deposit in ££, later opened another accounts in EUR and $$ and converted part of ££ to EUR and part to $$. I have it all in EUR now (my initial deposit and some profit). How do I calculate Tax for HMRC? Do I take the convert rates from 5th April 2010 (end of tax year) to get the actual amount on the account at the end of the tax year for the tax calculation?

Thanks a lot for any advice and your time

Silverring

 

[Silverring]

I have several Forex accounts in UK (Alpari). I have registered with HMRC as sole trader in UK from 01/2010 but I have travelled a lot and didn’t trade thus there is not much to tax. Nevertheless I have to calculate the tax however small it may be.

I have made most of profit while I was still employed – I understand that this time should be taxed as CGT. And Income tax should be paid since the start of sole trader registration?

I sent initial deposit in ££, later opened another accounts in EUR and $$ and converted part of ££ to EUR and part to $$. I have it all in EUR now (my initial deposit and some profit). How do I calculate Tax for HMRC? Do I take the convert rates from 5th April 2010 (end of tax year) to get the actual amount on the account at the end of the tax year for the tax calculation?

Thanks a lot for any advice and your time

Silverring

Anyone? I am sure some of you have an account in US and $$ but you tax it in UK – so how do you calculate the tax in this case?
Thanks a lot!

Silverring

 

[scose-no-doubt]

I'm not giving you any advice here but if I was in your position I'd probably create a monthly P&L for each currency for the 12 months. Then I'd contact HMRC for their official exchange rates used for tax, convert and use the aggregate as a yearly sterling profit.

Dunno how legit that is or anything and HMRC will never give out any guidance on how to calc your profits.

As I say this is not proper advice but rather something to think about when you GO SEE AN ACCOUNTANT. Just in case they try to rip you off like

 

[Silverring]

Thank you very much,
I’ll see & wait a bit if someone else would know but if no one I’ll try this – it makes sense and as I said there is not much to tax anyway so it shouldn’t be big deal for them.

Cheers

I'm not giving you any advice here but if I was in your position I'd probably create a monthly P&L for each currency for the 12 months. Then I'd contact HMRC for their official exchange rates used for tax, convert and use the aggregate as a yearly sterling profit.

Dunno how legit that is or anything and HMRC will never give out any guidance on how to calc your profits.

As I say this is not proper advice but rather something to think about when you GO SEE AN ACCOUNTANT. Just in case they try to rip you off like

 

[scose-no-doubt]

Thatll be £150 please

 

[ZurichTrader]

No advice intended here either but I can say what I did on my last set of accounts.

Monthly PNL for each currency. After trawling my way through HMRC documentation, used a big well known forex site recommended by HMRC to obtain an average monthly exchange rate for each currency to obtain a set of monthly PNLs and commission expenses all in Sterling.

Recorded monthly PNLs as Income (monthly profit) or Expense (monthly loss and commissions, exchange fees etc.). Do full set of accounts for other items such as rent, internet etc. and bung the end result in tax return. Got my tax confirmation within a couple of weeks of sending it in.

No tax advice intended!

 

[Silverring]

Thanks a lot, Zurich Trader. Could you mention which one is that big well known forex site recommended by HMRC and how can I obtain their average monthly exchange rate for each currency?
Cheers

No advice intended here either but I can say what I did on my last set of accounts.

Monthly PNL for each currency. After trawling my way through HMRC documentation, used a big well known forex site recommended by HMRC to obtain an average monthly exchange rate for each currency to obtain a set of monthly PNLs and commission expenses all in Sterling.

Recorded monthly PNLs as Income (monthly profit) or Expense (monthly loss and commissions, exchange fees etc.). Do full set of accounts for other items such as rent, internet etc. and bung the end result in tax return. Got my tax confirmation within a couple of weeks of sending it in.

No tax advice intended!

 

[ZurichTrader]

Silverring it was Oanda. Under the Currency Tools section there is a tool called Average Exchange Rates which you can use to calculate weekly, monthly or annual averages. HMRC docs lean towards consistency rather than enforcing a specific method but one of the calculations they suggest is what I outlined above.

Don't forget the accounting period gain/loss on currency balances as well between the rate at the start of the period and the rate at the end for any balances that stay in the non-Sterling currency (I'm not sure I wrote that sentence very well because I'm rushing!). I used the daily rate from 01/04/09 and 31/03/10 and record this as an exchange gain/loss at the end of the period as well.

 

[Silverring]

Thanks a lot Zurich Trader for your time and the all very helpful info.

Cheers,
Silverring