Hi guys I’m new to all this forex stuff, I’m from the U.K. and was wondering if I get into forex full time will I have to pay any tax towards my winnings or how does it work exactly? People have told me it’s spread betting so no tax will be paid however they also said if I do trading I will have to pay capital gains tax but isn’t forex trading and also spread betting? I look forward to your answers, many thanks.
Take a look at your broker platform. IF you are spreadbetting, it will tell you that in no uncertain terms.
Spreadbetting in the uk carries no tax liability (unless it is your main or only source of income) The reason it carries no tax is to avoid the possibility of people who lose reclaiming the tax against other investments. (HMRC well know that hardly anyone “wins” )
Capital Gains tax has a pretty high threshold. You need to be winning in the £10,000s before you even need to think about “Tax” - 
Don’t even worry about it until you are making sensible money ! TAX is the least of your problems 
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Brilliant thank you so much for this answer, much appreciated.
Also worth noting that Capital Gains tax does not apply to FX speculation, regardless of this being spread betting or indeed CFD speculation. The reson for this is becuase Capital Gains tax applies to the gain from a sale of an asset (both tangible and non-tangible such as stocks and shares). When speculating in FX through spreadbetting or CFD speculation you are using a derivitive, this means you never own the underlying asset and therefore don’t fall within the realms of Capital Gains tax.
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Tht’s interesting @BaconSandwich, I can live with the “CFD” extension to an extent - although you do actally purchase such a contract which then would become the “asset” - perhaps ? as indeed would Options or Futures.
More interesting to my mind is the practice we are encouraged to believe we particiate in - ie look at the “pipschool” and we “know” we enter a “long” EURUSD for example by buying Euros for in dollar amounts. These are sold in “Lots” of $100,000 each, and we can “buy” a small portion of a lot which then becomes our “Asset”. Gains on such an asset woud theoretically be taxable ?
But as we know, our “orders” never actualy get anywhere near the market. They are simply “Bets” to which our “broker” acts as “Bookmaker”. - So in theory I suppose they too should be “gambling” and therefore not taxable.
I can’t see HMRC allowing that argument though ! 
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Thank you so much for your answer, but what if let’s say I decide to leave my job and make a career out of forex with it being my sole income? Is the tax still void in this situation?
As far as I understand the contract is just an agreement which gives you the right, but not the obligation to transact at an agreed price at an agreed date in the future - therefore there is still no asset. It’s just another pretty derivative wrapped up in a sexy bow.
Now if you received physical delivery of the asset, I belive that this is where it would become a completley new ball game, such is when futures contracts expire if not rolled over - theres some funny stories here i’ve read on the exchanges too… Imagine buying futures in pork belly (when you could of course) and recieving physical delivery 
The babypips school is ‘trying’ to teach how the market works if you were to interact in a perfect world, what they need to add is a chapter on the grey background behind what is relaity - as you quite rightly said.
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It’s going to be a grey area, but you’d most certianly be looking at high income tax, which is why I’d go Corporated during the accumulation stage and thus pay a reduced level of corporation tax prior to wrapping up the business at the end and paying a single hit of income tax.
I’m no tax expert, but for things like this you’d really need to chat with an accountant; somthing to worry about when you’re making amounts of money which effect your sleep
No - If it’s your sole income and you’re good enough to make a profit (BIG IF !)
Tax man will want “his share”
AFAIK the only “tax exempt” way to do this is by spread-betting. The rest is just a “discussion” - but bear in mind the capital gains allowances (Don’t know exactly what they are - but they’re quite big as I said)
Don’t go “Corporate” until you were to get a Big income. Corporation Tax starts at 10% and starts at £1 ! - I don’t think “spreadbetting” is exempt for a Company either.
However, lets see if you can actually make a profit first !
No I don’t think they do ! - It makes no difference, for the likes of us
We’re stuck with it and if the newbies want to think they’re “Playing with the big boyz” - why do we need to disillusion them ?
It would just complicate the issue further when it is hard enough to get your head around and really doesn’t earn anything anyway !
It was just me being a little “cynical” perhaps ?
Been thinking 'bout this - I’m wondering If one could trade CFDs through an ISA ? I don’t see any real reason why not -but I don’t know much about ISAs because of the current reatively high Capital Gains Tax allowance situation.
It would need to be one which let you administer your own “investments” and that may be an issue - Worth investigating though. Do let us know what you unearth ! 
how was the problem solved?
Depends if you have an offshore account.
That aside, as everyone else has already said, you need to worry about making the money first then the tax.
The people that worry about tax first don’t usually make any money to pay tax on.
This is a recurring subject in trading. Part of the confusion arises from conflicting internet sources that aren’t clear whether they’re talking about the UK, the US, Australia or anywhere else in the world, where different tax treatments apply.
In the UK -
Spreadbetting profits (like all gambling profits) are exempt from personal taxation. There is a fear amongst us all that if your SB profits are your only or main source of income, you would be charged Income Tax. However, until I actually encounter a spreadbetter who is paying income tax in this way, I won’t believe it.
CFD profits are subject to Capital Gains Tax if these exceed the personal annual allowance. CFD’s are exempt from Stamp Duty.
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[quote=“tommor, post:14, topic:175250”]
Spreadbetting profits (like all gambling profits) are exempt from personal taxation. There is a fear amongst us all that if your SB profits are your only or main source of income, you would be charged Income Tax.[/quote]
HMRC have removed the fear, they have labeled it MTD - “make tax digital”. - check it out.
Takes effect from April next year.
that’s true of everything else about trading as well, and indeed true in the internet age about many aspects of everyday life
but it’s particularly true in this context, as you say
my attitude, too
there’s a huge amount of misinformation in forums on this subject
there’s been a myth for donkey’s years that if spreadbetting is your sole (or some people even say “main”) source of income, they’ll want to tax you on it
it’s rubbish, in my non-qualified, non-professional opinion
it’s always been rubbish but it’s always been argued about
i was reading that in a recent tax case the commercial court in London did slightly clarify the position - in the judgment in the case, it was held that the party concerned did have to pay tax on spreadbetting profits but only because those profits were incurred as one part of a wider trading-related business in which he was selling trading-related information (this was a “signal service”), and it was mentioned, obiter, that if he had had only the spreadbetting profits on their own without the other income from paying customers of the same trading business, that would not have been taxable
i found that helpful and understandable and it made sense to me
but not everyone has reacted to it the same way - some people think that the case has added to the confusion (i think they’re people who mistakenly believed some of the “information” they’d “learned” in trading forums!)
“ask an accountant who deals with traders” is probably the best answer - and especially, in this context, don’t rely on out of date information
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Can you put “spreadbetting” through an ISA ?
sorry - don’t know (i’ll be slightly surprised if you can, but that means nothing)
No, has to be a non-leveraged instrument - a stocks and shares account can be wrapped in an ISA.
Possible then to gain exposure to FX via ETF’s via such an account.