Tax issues for Forex Traders in the UK

rpaco · (#1 (**permalink**))

Would anyone like to relate their experience of dealing with HMRC re their Forex trading profits/losses and how you do (or do not) declare them to the tax man.

I believe they are taxed as income, but I may be wrong and they may be taxed as Capital gains. However in order to avoid any liability I Spread Bet instead. Income from betting is tax free to the punter in the UK, although there is a gaming tax paid by the bet provider/bookmaker. Whether this applies to Capital Spreads/London Capital Group Ltd I am not sure.

This of course gives me £1 per pip movement (less spread of course) and by traders with real Forex accounts, may be considered to be highly leveraged. Since I need only £60 in my account to bet £1 per pip on Cable and £40 to bet on most other pairs.

andydoc · (#2 (**permalink**))

That is highly leveraged - I use CMC spreadbet and need £150 for £1 per point Cable and Fiber.
I would continue with Spreadbetting as long as you are getting good fills and not too much slippage. I will use a Panama Foundation when there is enough money in the pot, but for the moment am happy to continue with this.
If you do go legal and want to pay tax, it is arguable as to whether you are talking about Capital Gains or Income - regular daily trading would probably be construed as income, whereas long term position trading would count as Capital Gains.