FOREX trading and Tax

mace80

Dose a UK taxpayer pay tax when it comes to FOREX trading, on top of your other income (full time job)

For the record I called HMRC about this question, they were more focused on knowing my national insurance number :undecided and it has been over 2 months I am still waiting for a call back

If taxable where is the evidence because I could not locate anything and how would you calculate tax considering profit/loss

Thanks for you help!

bearcat16

It depends on how you are trading. If you are spread-betting (eg with IG etc) then that is considered gambling in the UK and, just like other forms of income from gambling like scratch-cards winnings, is not taxable in any way.

If you are trading contracts for difference (CFDs) with a broker like Avus Capital (who run the ever popular "Trading 212" platform), then gains made are subject to capital gains tax at the standard rate. Losses can be set-off against though, so you only pay tax on your net position.

If you are not using a broker and trading actual currency then just like CFDs, gains are subject to capital gains tax at the standard rate.

How income is calculated is straightforward, brokers will email you a statement (usually daily) with detailed information on your trades and any profit/loss that has been made. You simply use this information to calculate the profit or loss over the year, then declare this on your tax return.

If you want to avoid any doubt (or hassle) then simply stick to spread-betting with a reputable broker, and then tax won't ever be an issue.

moneystreams

It will be interesting to know what HMRC reply to this question is.

I also have a situation I'm waiting for clarification from HRMC - I wanted to re-claim VAT on the payment I made for a forex and shares training course. As I have included my trading activity in a registered business (Partnership) which is engaged in other activity. Does anyone know if I am allowed to reclaim the VAT or not?