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CFD's, CGT, Spread Betting, Taxes - UK Broker...

  • 18-05-2015 10:03am
    #1
    rymass
    Registered Users, Registered Users 2 Posts: 34 ✭


    Hi Everyone,

    I am looking into doing some trading through a UK/Bulgarian broker (trading212.com)

    Is my understanding correct when I say I will not have to pay CGT when trading with CFDs because I hold a full time job. ie.: revenue will see this as spread betting.

    Thanks,
    Ryan


Comments

  • #2
    OttoPilot
    Registered Users, Registered Users 2 Posts: 540 ✭✭✭OttoPilot


    rymass wrote: »
    Hi Everyone,

    I am looking into doing some trading through a UK/Bulgarian broker (trading212.com)

    Is my understanding correct when I say I will not have to pay CGT when trading with CFDs because I hold a full time job. ie.: revenue will see this as spread betting.

    Thanks,
    Ryan

    Hi Ryan,

    Spread betting is not taxed, CFDs are. From Revenue's website "Contracts for Difference are capital assets to which the CGT rules apply, unless they are held in the course of a financial trade which is chargeable under Case 1, in which instance the charge will be on the accounting profit."

    So basically, if you're primarily a trader, you will pay self assessment tax on the accounting profit you make in your profession like any other vocation. If you're just doing it on the side you'll pay CGT, less any fees/interest.

    Even if you make very little, I think you would have to declare it, as with most supplemental income (excl gambling).

    Out of interest, what broker are you going with? I'm considering trading CFDs in the near future and I'm shopping around now.


  • #3
    rymass
    Registered Users, Registered Users 2 Posts: 34 ✭rymass


    Thanks OttoPilot,

    I think the best thing to do would be to chat to an accountant because some say it falls under spread betting and others say it falls under CFD's... quite confusing for a newbie.

    Myself and my step-father have signed up to trading212.com with only a minimal amount of €1000. But so far so good, made 128 on small trades these last two days. Obviously I'm not too concerned about tax with these amounts, I more concerned when (fingers crossed) we start making a decent profit.

    I've been doing some research online and it seems that these sort of sites fall under spread betting... I just need to be 100% sure... I don't want to get on the wrong side of the tax man.


  • #4
    OttoPilot
    Registered Users, Registered Users 2 Posts: 540 ✭✭✭OttoPilot


    I'm actually training as an accountant at the moment!

    Unfortunately, it looks like its all cfds, not spread betting, to me and so would be liable for cgt, which is 33%, unless you declare it as trading income, then it would be at your marginal rate of tax.

    Obviously it's up to you if you want to take the risk not to declare even a small amount, but I would recommend declaring it (since you're more likely to lose money starting off) keeping a detailed account of your gains/losses, and then you can offset your future trading profits against your losses and reduce your tax liability.

    Good luck!


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