Tax on trading forex

V2001

I work full time, but on the side I'm trading forex currency via cfd.
Do I need to pay cgt on profits? Also say my profit is £13000 for the year , is tax payable after the allowed £12000 cgt allowance, so only 1k payable?

Jeremy535897

See https://www.dailyforex.com/forex-articles/2020/03/do-i-pay-tax-on-forex-trading-in-the-uk-29-march-2020/136070

V2001

Ok thanks.
So on cfd trading I pay cgt if it goes over the cgt allowance for the year.  What I'm not clear on say for eg i make 20k in the first year and I don't withdraw any profits and year 2 I make another 20k and so on. Do i only declare paying tax when I actually withdraw the money to my bank account ? As I can make a loss at any time and its only a gain once I withdraw?
Also if I pass my gain to my wife can we combine our cgt allowance for the year?

Jeremy535897

"Most Forex brokers offering CFD trading also impose an additional trade when converting your profit or loss back to the original currency of your account, which adds another dimension to your profit or loss. For example, if your account’s base currency is GBP, but you make a profit of 10,000 Japanese Yen, your broker will usually credit you with the Yen profit at the end of the day, converting it into GBP at its prevailing GBP/JPY price at the moment of conversion."

When you realise a profit, that is when it is taxable, not when you move it into your bank account. I suspect that the broker would require your wife to have a separate account, or perhaps they do joint accounts?

V2001

What if once i realise a profit and that money is reinvested back into trading is tax still payable on the profit made? Or is it not because it has been reinvested and so could still occur a loss...

Oh I meant if I pass the profit onto my wife once withdrawn to my bank account can we combine our cgt allowance?

Jeremy535897

The taxation treatment of CFDs is complex. There is some discussion here:
https://www.wealthprotectionreport.co.uk/public/Tax-Treatment-of-Options-and-Warrants.cfm

I'm not sure how up to date it is. You certainly cannot "pass the profit on" to your wife. She has to do the trades herself.

Sorcerer2018

V2001 said:

What if once i realise a profit and that money is reinvested back into trading is tax still payable on the profit made? Or is it not because it has been reinvested and so could still occur a loss...

Oh I meant if I pass the profit onto my wife once withdrawn to my bank account can we combine our cgt allowance?

If you sell and then rebuy more later, you are still liable for the CGT that happened when you first sold it.