Hello you guys and girls,
Where is the most appropriate place to ask what kinds of tax I will be paying on my forex profits (of course having those profits in the first place is a given for a “pro” such as me, he he)
Thanks 
ps. I live in the UK and intend this to be my main source of income while I am at university.
First of all it totally depends on what you are trading in terms of your account type.
Secondly it then depends on your country of residence.
Thirdly is then depends on if you have additional sources of income other than that of trading.
For example, if trading is your primary source of income then you will be taxed via income tax. The taxed amount will be your profits less your tax free allowance. Capital gains tax will not be charged as you are trading derivatives, and so never have ownership of the underlying financial asset. Your best choice is to speak to your local tax office, although as you have already said, until you are making profits this should not be an issue!
All has to do with where you are from. If you are in the United States, this website has been very helpful: www.greentradertax.com
US - you will be paying ordinary income tax.
Ahhh tax… you gotta love it!!
In short if you are trading in the UK then the following applies.
If you open a spread betting account with a broker then all of your profits are tax free as this is considered gambling as you do not enter trades on a centralised exchange but place a bet against your broker.
If you are using a spot forex account then any profits made are subject to income tax, NOT capital gains tax.
Agree with all the aforementioned. Then there are a miriad of tax havens to be exploited across the globe both sides of the pond, from zero tax (Cayman Isles) to as much as 10% legitamately. I can put you in touch with a great tax lawyer/ accounts firm no problem if and when you hit the big numbers! 
It would be really nice if that were so wouldn’t it, but I’m afraid it’s not.
It has nothing to do with centralised trading at all.
The UK tax law relating to spread betting is such that unless your [U]primary income[/U] is derived via spread betting, you will not be subject to income or capital gains tax on those profits.
If however, spread betting (either exclusively or not) is adjudged by the revenue to form a major part of your primary source of income, you will be subject to the usual tax laws & arrangements currently applicable.
Thanks. I will have to research into this
Different country have different rules for tax on forex trading. So, it completely depend on you residence country and tax rules there.
Gah, income tax… 
so more than 20% of profits
If you’re paying 20% you are grossly ignoring tax incentives. Aside from that, you can always look at it on the bright side: most traders lose and don’t have to pay any tax at all.
I know what you mean brother!
I am new to Forex but I know in maybe a year I will be ready to trade! I was thinking the same thing after looking at the compounding effects and how powerful the effects are. I mean to say, 20% saved is 20% earned! My point is that in the next year I hope to find a way to open a self directed Roth IRA that I can use. I know you might not be from the USA, but if you are I think it would be a great way to go.
Just my opinion but I have thought of this very same thing!
good luck and peace out Bro or sis!
I am in the US. Of all professions, I’m a financial advisor at that. You’re getting your IRA’s confused, well… you combined them.
With a Roth IRA you are contributing with taxed earned income. You are able to only withdraw your basis without penalty prior to 59 1/2. After that time frame you can take out withdrawals of both principal and interest tax free. There are limitations with both income and contributions. Its not an account for high income earners and you can only contribute $5000 a year into it.
That all said, I have never set up an account where spot forex was traded within a Roth IRA. I’ve never seen it offered either, but I don’t offhand see that there would be a problem with it if a US institution offered such an account.
I think if it was the case, there would be vast amounts of regulation to discourage people from blowing out their retirement savings. The government allowed such accounts as an incentive for people to save money. The more they save, the less dependent on social programs they become. With the track record Forex has in losing people’s money, I can’t believe the government would sit back and let people abuse the program to essentially gamble in high risk markets with outrageous amounts of margin.
Is there a UK trader on these forums. Maybe he or she will be more aware of UK specific regulations?
This is for UK Personal Allowance, After you earn over £100,000 in a tax year you lose your Personal Allowance and so your total income is taxable.
This table shows the Income bands that we can earn in the Tax year, and the percentage of tax due on each income band.
I hope this helps.
So, if you were earning £250,000 per tax year trading Forex.
You are only open to Income tax, not Capital Gains Tax.
This would be how you work out the income tax due on a £250,000 Forex related income for the tax year 2012-13
£250,000 Income - £0.00 Personal Allowance (no personal allowance as we are earning over £100,000)
£34,370 of the £250,000 taxed at 20% = [B]£6,874[/B]
Now we have the £250,000 - £34,370 = £215,630 which still needs taxing
£150,000 of the £215,630 taxed at 40% = [B]£60,000[/B]
Now we have the £215,630 - £150,000 = £65,630 which still needs taxing
£65,630 of the remaining £65,630 taxed at 50% = [B]£32,815[/B]
So, the income tax due on a £250,000 income via Forex trading would be:
£6,874 + £60,000 + £32,815 = [B]£99,689[/B]**
Income received after tax:
£250,000 - £99,689 = [B]£150,311[/B]**
**This is an estimation and should not be used to compute any tax workings.
In the UK, if you use spread betting rather than Spot trading, it is tax free. Spread betting is still classed as gambling in the UK. Might want to check that out
Unfortunately, as discussed in other trading tax related threads, spread betting is not as tax free as the brokers make out. It has a lot to do with what other sources of income you are earning. Just because it is classed as gambling it does not make you exempt from tax of any kind.
For example, professional poker players, this is classed as gambling, they have to pay tax as the HMRC class them as professional speculators. The same principle would apply for a full time client who trades via spread betting. If spread betting income is proven to be your primary source of income, or your only income, then you will have to pay income tax on the same bases as each and every other UK citizen.
The issue with the HMRC is that no matter how much you argue a case based on the current tax regulations, they have the authority to look at your own personal circumstances and make amendments as they see fit. So, no matter how much we talk about spread betting being tax free or not, it depends on your own personal case.
Thank you Jezzode, you have been of immense help.
Once I near these brackets I will look into how to alleviate tax payments as this is absurd in my book. For now I have to worry about how to get the profits high enough 
Thank you Jezzode and others, you have helped me a lot
Jay