Hi im new here, im 21 years old and am thinking about starting to trade forex with a live account . ive been on a ‘game’ account for a year and have had great success. The thing that i am confused about is the Tax situation with money earned from forex trading. I thought that any money made from forex was free from any tax but now ive just read that this only applies to spread betting companies and not Forex brokers … i think. So whats the deal with tax and forex ? Do i have to pay both income and CGT ? I live in London.
Many purist traders are anti spread betting. Whilst I would not trade a 6 figure account this way, it is a simple method of trading, tax free and the resultant bottom line is comparable. By using reputable companies there is no more risk than using a broker and can often be far easier to open an initial account.
If youre working for a bank or hedge fund and salaried/ bonus its a non starter, you pay income tax and capital gains… bummer. :mad:
But if your a retail/ private trader then there are steps that can be taken to greatly mitigate the tax burden. I suggest when your earning a six figure income looking into the big players in accountancy and law firms. With a little legal two step you can get your taxes down to around 10%.
What if Forex trading was my only/sole income … would i have to pay CGT and Income tax. i wouldnt mind paying CGT if a broker is the best option … i think its 18% here in the UK.
Can anyone recommend a good broker or spread betting company. i was thinking about using Barclays, FXCM or IG index
December 2009’s edition of “Technical Analysis of Stocks and Commodities” has an article on page 64 titled “UK Tax Implications for Currency Traders”, but I think this was targeted more at US traders with accounts in the UK. Still, they talk about UK tax laws there.
I’m pretty sure - 95%! that it’s CGT at 10%, also remember the N.I. contributions at £5 or so a month, that is if your income as opposed to the Capital Gains is more than about £5k per year.
I think that’s it really.
