Broker to trade options and futures in UK

the_learner

Hi, do you know if there is any UK bank that aloows to trade options and futures?

I have found Interactive Brokers but they are not UK based so I think it would be a problem for tax purposes.

https://www.interactivebrokers.co.uk/en/main.php

Since there is a GBP 11,000 tax free allowance in UK, I am wondering if this also applies to trading in options and futures.

If that's the case, suppose I make GBP 10,000 gain trading options/futures by using Interactive Brokers as account. What happens to my fiscal situation?

They are not UK bank so I have to declare any gain/loss I have done in my tax return next year?

dealer_wins

Wow, from not understanding how ISAs work to wanting to trade options and futures all in 2 months LOLOL

BLB53

IG Index are the leading player in this area
http://www.ig.com/uk

I think all gains are tax free as it is classed as betting, so would not need to be declared on your tax return.

bowlhead99

You have to be aware of the different types of taxes to which you might be exposed on different products.

Saying "They are not UK bank so I have to declare any gain/loss I have done in my tax return next year?" shows some misunderstanding. If it was a UK bank or broker it wouldn't mean you wouldn't need to declare the gains or losses -it is always up to you to declare your tax affairs to the tax man (beyond PAYE and interest at basic rate on current accounts). Gains and losses for a year are only something that you yourself can work out at the end of the year, so whether your broker is in UK or abroad, they won't try to deduct UK CGT in real time.

There is a difference between futures contracts and CFDs and options on one hand vs spread bet on the other. The former are financial instruments and making gains or losses on them is subject to CGT - although as they are derivatives they are exempt from some taxes like UK stamp duty. The latter, spreadbets, are simply bets placed on an event happening, even though they can give you a functionally similar result to buying or writing an option or opening a cfd. Bets are not subject to cgt in UK. Some providers will offer both CFDs and spreadbets. I use IG, who are well established and reputable.

Of courifCif you are running a business buying and selling contracts then that might be subject to income tax rather than cgt, but most individuals are doing it casually (cgt) or via spreadbet (tax free).

the_learner

bowlhead99 wrote: »

You have to be aware of the different types of taxes to which you might be exposed on different products.

Saying "They are not UK bank so I have to declare any gain/loss I have done in my tax return next year?" shows some misunderstanding. If it was a UK bank or broker it wouldn't mean you wouldn't need to declare the gains or losses -it is always up to you to declare your tax affairs to the tax man (beyond PAYE and interest at basic rate on current accounts). Gains and losses for a year are only something that you yourself can work out at the end of the year, so whether your broker is in UK or abroad, they won't try to deduct UK CGT in real time.

There is a difference between futures contracts and CFDs and options on one hand vs spread bet on the other. The former are financial instruments and making gains or losses on them is subject to CGT - although as they are derivatives they are exempt from some taxes like UK stamp duty. The latter, spreadbets, are simply bets placed on an event happening, even though they can give you a functionally similar result to buying or writing an option or opening a cfd. Bets are not subject to cgt in UK. Some providers will offer both CFDs and spreadbets. I use IG, who are well established and reputable.

Of courifCif you are running a business buying and selling contracts then that might be subject to income tax rather than cgt, but most individuals are doing it casually (cgt) or via spreadbet (tax free).

Hi, thanks for the answer.

I am talking about exchange traded derivatives, like futures and options in DAX (both exchanged in EUREX market). So no spread betting.

I come from a country (Italy) where you can delegate your bank to retain part of the gain (e.g. 26%) as capital gain tax. This is done directly, once the gain is realized.
It is convenient cause then you don't need to declare any gain in your tax return statement since all capital gain have already been taxed.

Anyway, it works this way only if the bank is resident in your country, so if you are in Italy and decide to use Interactive Brokers you cannot delegate tax payment as described above. You simoly receive the whole gain and then at the end of the year you declare the sum in the tax return statement.

Now I am wondering how it works here in UK. Suppose I want to use Interactive Brokers and that I realize a gain of GBP 10,000. Is it tax free (being within tha allowance)?

the_learner

BLB53 wrote: »

IG Index are the leading player in this area
http://www.ig.com/uk

I think all gains are tax free as it is classed as betting, so would not need to be declared on your tax return.

Hi, thanks for answering. I am looking for brokers that give access to exchange traded derivatives. Like futures and options on DAX.