UK Tax/Accountants

[spotdespot]

Does anyone here use an accountant in the UK who knows what they are talking about with respect to forex trading and minimising tax liabilities? I am struggling to find anyone useful. There is a company called Accountants for Traders but they have promised much and completely failed to deliver anything beyond our original call so far.



Thanks,
Dave.

[crashout]

Go directly to a big one : "Ernst and Young" for exemple. They have lots of experts in one place.

[SteveHopwood]

Surely an accountant is someone who knows what he or she is talking about re tax affairs? Tax is tax, wherever the income derives from.

This one is mine: she has saved me a lot of money and kept me clear of IR inspections. http://www.pulleyblank.co.uk

Send Vanessa an email and ask how/if she can help.

[garyfritz]

If tax laws in the UK are like in the US, all accountants are not alike. There are quite a few confusing details surrounding trading income. I've used several accountants and very few of them really understand the issues associated with trading tax law.

[spotdespot]

Surely an accountant is someone who knows what he or she is talking about re tax affairs? Tax is tax, wherever the income derives from.

This one is mine: she has saved me a lot of money and kept me clear of IR inspections. http://www.pulleyblank.co.uk

Send Vanessa an email and ask how/if she can help.

Thanks Steve I will try to get hold of her. The reality unfortunately is that most accountants are pretty clueless in my experience. It seems i may go down a spread betting route, which i hadn't seriously considered, but there are one or 2 players that now make it a viable option. FP Markets are worth a look if it is an option for anyone who is serious.

Cheers,
Dave.

[spotdespot]

If tax laws in the UK are like in the US, all accountants are not alike. There are quite a few confusing details surrounding trading income. I've used several accountants and very few of them really understand the issues associated with trading tax law.

Thanks Gary. It is similar in the respect that many accountants have no idea but we have very different tax laws. You can spread bet forex in the UK (and other instruments) tax free but regular forex is subject to capital gains tax rather than income tax - it isn't simple that's for sure - but what is?

Thanks,
Dave.

[spotdespot]

Go directly to a big one : "Ernst and Young" for exemple. They have lots of experts in one place.

Thanks but i used to work for very similar companies. If Steve can transpose br0ker to criminal he should do the same for guys like these imo

[youcrazykids]

Hi all

For us UK residents, FXCM recently introduced spread betting using the Empty4 platform, for those of us who wish to circumvent the whole trading taxation situation in the UK. Just a heads up. However, it isn't a magic bullet. If trading through spread betting eventually becomes your chief source of income, it will still probably become taxable according to IR rules. Argh!

Thanks

youcrazykids

[spotdespot]

Hi all

For us UK residents, FXCM recently introduced spread betting using the Empty4 platform, for those of us who wish to circumvent the whole trading taxation situation in the UK. Just a heads up. However, it isn't a magic bullet. If trading through spread betting eventually becomes your chief source of income, it will still probably become taxable according to IR rules. Argh!

Thanks

youcrazykids

This is something I have been looking in to pretty closely. There is a lot of contradictory and misleading information floating around on the tinterweb. One thing I have been looking at specifically is the "chief source of income"/"professional gambler" status issue. Since i started this thread I have received an email from an accountant who is the tax manager for his company and certainly used to have a specific interest in trading - I found him through posts on another trading forum that dated back 5 years or so. I sent an email to his company not really expecting much back and he was kind enough to send a very good reply. I will post it here when I am back in the office tomorrow, but the gist of it is that "chief source of income"/"professional gambler" status does not exist. It doesn't matter it is always tax free UNLESS it is linked to your business in a direct way. The example he gave was a copper merchant who used spread betting to hedge copper prices - then it would be taxable.

Once I had this info I started getting more excited about spread betting as a serious alternative until I started looking at brokers. The trading conditions, including spreads, offered by the likes of FXCM, Alpari spreads etc are awful when compared to, what i consider the most fair, like Bully Pepperstone that I use now. I actually think that using these types of broker for spread betting is worse than paying the tax. The biggest reason for not using them is the fact that they are effectively all market makers - you win - they lose. A direct correlation in many cases plus they are charging you huge spreads for the privilege. It just isn't in their interest for you to win and they can't off load any of the risk except by hedging themselves, for which there is a cost to them also.

However I have now found a couple of brokers that don't work that way and I would strongly suggest if people are going down the spread betting route they do their homework on brokers. I am currently looking at FP Markets and so far they look good. I won't go in to the reasons why they seem different here as I don't want to endorse anyone but you can do the google thing and make up your own minds.

Thanks for all the replies.

Cheers,
Dave.

EDIT: Copy of the email text below from the accountant tax manager as promised.
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Spread betting is, as the name suggests, a form of gambling and, as such, is not liable to UK tax, even if you have no other income. There is no legislation to confirm this but there have been many tax cases where gambling has been shown to be tax free whereas running an account as a bookmaker found to be a taxable trade. Although commonly referred to, there is no such thing as a “professional” gambler. A person may be lucky or “skilful” enough to make money from gambling, particularly if hedging, however this does not render his winnings liable to tax.



Compare the situation where you use a br0ker to buy a CFD and then at a later date sell it at a gain or loss; the Revenue will treat this as falling within capital gains tax rules, just like stocks and shares. If, however, you gamble on the position on the betting exchanges this is not the purchase and sale of a financial derivative, it’s just a bet.



There are circumstances where the Revenue might argue that spread betting winnings form part of a bona-fide trade where the transactions are linked; for example a copper merchant hedging the price of copper on the exchanges.



I hope this puts your mind at rest.
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