Tax and Forex profits
Discussion
Hi,
Was wondering if anyone could shed some light on my tax position. I have a full time job that has nothing to do with investments, so I trade on my spare time, I have currently have a reasonable size amount in a managed account. I hope to be able to pull out between £20K-£100K this year. Would this be classed as capitol gains, have read a few places that it also could be classed as gambling, thus no tax, but no test cases have been able to prove this yet. Would it be an idea to become a ltd company?
Thanks for any help
Was wondering if anyone could shed some light on my tax position. I have a full time job that has nothing to do with investments, so I trade on my spare time, I have currently have a reasonable size amount in a managed account. I hope to be able to pull out between £20K-£100K this year. Would this be classed as capitol gains, have read a few places that it also could be classed as gambling, thus no tax, but no test cases have been able to prove this yet. Would it be an idea to become a ltd company?
Thanks for any help
Speak to an accountant.
If I recall correctly there was a recent change to tax law that meant a gain on fx was no longer treated as a gain for CGT.
However, I suspect that this was if it was an incidental gain, rather than a gain made due to speculation.
I'm sure Eric will be along to give a more definitive answer.
If I recall correctly there was a recent change to tax law that meant a gain on fx was no longer treated as a gain for CGT.
However, I suspect that this was if it was an incidental gain, rather than a gain made due to speculation.
I'm sure Eric will be along to give a more definitive answer.
I am no expert in this field.
It would make sense to me to have profits such as this taxed as normal "trading" profits - which would therefore be subject to Income Tax and possibly Class 4 NI as well.
If, in the past, HMRC were happy to treaty these types of profits as Capital Gains rather than Income, I think that would have been ironic since the profits were derived from share "trading".
It would make sense to me to have profits such as this taxed as normal "trading" profits - which would therefore be subject to Income Tax and possibly Class 4 NI as well.
If, in the past, HMRC were happy to treaty these types of profits as Capital Gains rather than Income, I think that would have been ironic since the profits were derived from share "trading".
Hi and thanks for the replies!
It is definitely not a spread betting account, so I know I will have to pay tax, it was more if its going to be Capitol gains. It does seem to be a grey area still, I shall be seeking professional advice but trying to find someone who knows there stuff on this should be interesting. I am a member of the Federation of Small Business and they have a tax department ,so that will be my first port of call as I don’t think my normal accountant will be much use
It is definitely not a spread betting account, so I know I will have to pay tax, it was more if its going to be Capitol gains. It does seem to be a grey area still, I shall be seeking professional advice but trying to find someone who knows there stuff on this should be interesting. I am a member of the Federation of Small Business and they have a tax department ,so that will be my first port of call as I don’t think my normal accountant will be much use
How do you mean "commercial basis", this is not my full time job, I own a retail shop. The money is invested in managed account which trades forex, i have my own account at the brokerage (Axitrader) and have signed a LPOA for them to trade it.
I read some other place:
______________
Tax treatment depends if you are an "investor" or a "trader".
Investor=pay CGT
Trader=Pay income tax.
Anyone who is in full time employment is an investor (or it will be automatically assumed that you are not a trader).
______________
If its income tax & NI would I be better to open a LTD company and invest though that?
Again, thanks for any help!
I read some other place:
______________
Tax treatment depends if you are an "investor" or a "trader".
Investor=pay CGT
Trader=Pay income tax.
Anyone who is in full time employment is an investor (or it will be automatically assumed that you are not a trader).
______________
If its income tax & NI would I be better to open a LTD company and invest though that?
Again, thanks for any help!
Full time/part time makes no difference. Having another main job or business makes no difference.
If you buy and sell ANYTHING with a view to selling it at a profit, HMRC defines you as "trading" which means that you will pay Income Tax and NI on the profits from that activity.
If you buy something as an INVESTMENT, hang on to it for a while and, when you do sell it on at a later date and it does HAPPEN to make a profit, that is PROBABLY a Capital Disposal and will be subject to Capital Gains Tax rather than Income Tax.
We all know that there is sometimes a rather fuzzy line between a transaction that was of a revenue or capital nature - and HMRC and taxpayers have had to fight their corner on this issue on a number of occasions.
However, in your case, what you are describing does seem to indicate to me that what you want to do is run a small, part time TRADING activity - which will be subject to Income Tax and Class 4 NI.
If you buy and sell ANYTHING with a view to selling it at a profit, HMRC defines you as "trading" which means that you will pay Income Tax and NI on the profits from that activity.
If you buy something as an INVESTMENT, hang on to it for a while and, when you do sell it on at a later date and it does HAPPEN to make a profit, that is PROBABLY a Capital Disposal and will be subject to Capital Gains Tax rather than Income Tax.
We all know that there is sometimes a rather fuzzy line between a transaction that was of a revenue or capital nature - and HMRC and taxpayers have had to fight their corner on this issue on a number of occasions.
However, in your case, what you are describing does seem to indicate to me that what you want to do is run a small, part time TRADING activity - which will be subject to Income Tax and Class 4 NI.
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