Personal tax liability on foreign currency speculation 22 September 2022 at 8:45PM in Cutting tax 2 replies 73 views

expansion

Is there a tax liability for individuals from foreign currency speculation? For example let's say I buy $100 for £90. I do this for the sole purpose of currency speculation. A year later I sell $100 for £120. Is the £30 gain taxed? Under what tax? Does it matter where it was held, is there a difference between doing it in a trading account that allows holding foreign currency like ii or a currency account like wise? Let's say instead a year later I sell the $100 for only £70. Can the £20 loss be used to write down tax?

It is just an example so I can understand how the tax part works if there is any tax relevance. Also to be clear the currencies involved would only be conventional real currencies so not interested if crypto works differently and has its own rules.

Voyager2002

Yes, there is indeed a tax liability. In your example you might face either capital gains tax or income tax: to determine which they would look at the whole pattern of your trading and the other ways (if any) in which you earn a living.

Jeremy535897

Foreign currency bank accounts held by individuals are exempt from capital gains tax under section 252 TCGA 1992. HHMRC almost never accept that individual casual speculators in financial instruments are traders, because most make losses rather than gains.