Reducing CGT on Forex earnings

Dan22

From what I know, if I live in UK, have a primary job (income £7000/year) that I pay NIC and income tax on, then I can trade Forex and earn a £million if I want and only pay 18% CGT on it.

But what if my Forex broker is in Switzerland, and the bank I use to store Forex profits is also in Switzerland. And those money/profits will never come into the UK, does that mean I don't have to pay any CGT on it ?

Cook_County

Dan22 wrote: »

From what I know, if I live in UK, have a primary job (income £7000/year) that I pay NIC and income tax on, then I can trade Forex and earn a £million if I want and only pay 18% CGT on it.

But what if my Forex broker is in Switzerland, and the bank I use to store Forex profits is also in Switzerland. And those money/profits will never come into the UK, does that mean I don't have to pay any CGT on it ?

Only if you are non-UK domiciled and you pay the £30,000 remittance basis charge.

Please teach us all how to make a £million?

Londonboy_3

If you are a currency dealer by trade it is likely you will pay income tax on profits rather than capital gains tax on gains.

tyllwyd

Be careful - its a long story, but my OH got persuaded by a friend into putting money into Forex trading via a company in Switzerland and they were both conned by the broker and lost every penny. There are definitely Forex scams going on out there.

Dan22

Yes there are many scam brokers, but these are mainly retail brokers that allow opening an account with a small deposit, and they then trade against you.
But if you got for a large broker such as Dukascopy, they are ECN (Electronic communications network) which passes your order directly to the major bank, they don't trade against you as they earn on the spread + commission.

I am a currency dealer but I am also a self employed PC assembler and seller. So if I earn about £6000/year from this job (3 hours work per week), then I can say this is my main job and currency trading is done in spare time, so only CGT there.

Thanks for the info about "£30,000 remittance basis charge". Is this a one-off payment or a yearly charge ? Such a high fee seems a bit of a ripp-off.

That brings me to plan B:

If you manage the risk correctly then currency spread betting becomes the same as being a currency dealer.
You can pretend that you deal on Forex, then quickly convert your investment and make the right bet with the spread betting broker.

No tax on betting right ? The 1925 court case was lost "Graham vs Green" those in the know will know what I mean.

Cook_County wrote: »

Please teach us all how to make a £million?

Very simple:
Step 1: Spend 4 months learning and researching Forex. Try the free school at babypips com
Step 2: Trade the Forex demo account untill you double it.
Step 3: Get a real account and trade with a return of 10% per month (or more )

John_Pierpoint

You are trading and winning.
It is a negative sum game in that a modest cost of trading is skimmed off each deal.
Who do you think is losing?

Dan22

John_Pierpoint wrote: »

You are trading and winning.
It is a negative sum game in that a modest cost of trading is skimmed off each deal.
Who do you think is losing?

Statistically 95% of traders loose their investment in the first 6 months.
Loosers are the guys that rush into trading without doing any research.
Loosers are people that see forex as a gamble or quick get rich scheme.
Loosers are successful traders that get greedy over time.
Loosers are the people that try to revenge the market after one loosing trade.
Loosers are the unlucky ones who's electricity or internet cut out during a big trade.
Loosers are many more....

Yes I have been making consistent profit for several months, but I only trade when I see a low risk - high reward opportunity. Otherwise I don't touch it with a bargepole.
I aim for minimum 10% profit per month, if I make 30% I go on holiday for the rest of the month.

Dan22

There is also a known method where you can combine forex trading and spread betting to hedge.

You always buy long when spread betting and sell short on forex.

It works because the value of a pip is fixed in spread bets and variable in forex.

With this method you make a profit no matter where the market goes. It's not possible to loose.

It's not a popular method because the profit is normally 200 times smaller than it would be if you traded with a risk.

PolishBigSpender

Anyone asking on here about taxes related to Forex profits simply isn't capable of making those profits - fact.

Cook_County

Dan22 wrote: »

Statistically 95% of traders loose their investment in the first 6 months.
Loosers are the guys that rush into trading without doing any research.
Loosers are people that see forex as a gamble or quick get rich scheme.
Loosers are successful traders that get greedy over time.
Loosers are the people that try to revenge the market after one loosing trade.
Loosers are the unlucky ones who's electricity or internet cut out during a big trade.
Loosers are many more....

Yes I have been making consistent profit for several months, but I only trade when I see a low risk - high reward opportunity. Otherwise I don't touch it with a bargepole.
I aim for minimum 10% profit per month, if I make 30% I go on holiday for the rest of the month.

From what I read above the profits are very loose. I suspect this may mean lose or losers but not a tax issue.

devils_advocate

I am a currency dealer but I am also a self employed PC assembler and seller. So if I earn about £6000/year from this job (3 hours work per week), then I can say this is my main job and currency trading is done in spare time, so only CGT there.

I don't know what your authority for saying that trading only attracts CGT, but I suggest that you google 'Badges of trade' re income tax.