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HI all,

I was wondering if you are a full-time retail trader, how would you cope with tax and NI. 

Do you register as a sole trader and pay tax and NI if yes is that class 2 NI ones a year?

Any advice highly appreciated.

Thanks. 

 

 

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  • 4 months later...
On 16/10/2020 at 09:11, Sudu said:

HI all,

I was wondering if you are a full-time retail trader, how would you cope with tax and NI. 

Do you register as a sole trader and pay tax and NI if yes is that class 2 NI ones a year?

Any advice highly appreciated.

Thanks. 

 

 

This is a grey area - I don't even think HMRC know to be honest!

The way forward if you make good profits at spread betting is to shove the surplus profits into an ISA and/or SIPP and then trade shares/ETF's through those instruments as they are not liable to capital gains or income tax - they are virtually tax free and as such you have no obligation to report trading profits/losses to HMRC

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim22020

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim22019

 

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  • 2 months later...

Thanks a lot, would be great to know how to surplus into an ISA. It would be great is there any option SB to ISA. In my dashboard I can not see any option for investment. I have been questioning about share dealing account from customer service but they sent me a new form to fill for share dealing as a new customer. 

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1 hour ago, Sudu said:

Thanks a lot, would be great to know how to surplus into an ISA. It would be great is there any option SB to ISA. In my dashboard I can not see any option for investment. I have been questioning about share dealing account from customer service but they sent me a new form to fill for share dealing as a new customer. 

I've got multiple accounts - my ISA isn't with IG - gains are simply withdrawn into personal bank acc and then from there make an ISA contribution up to the annual allowances 

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I just wanted to add given many people have lost jobs due to lockdowns and resorted to SB trading full time and the industry sells SB product as tax-free to the public. therefore profits from SB are never declared during self-assessments.

The way i understand is if you do not have any other means of income other than trading AND you are winning substantial sums of money from spread betting, then you could be potentially/technically taxed on profits from spread betting. I say technically/potentially because when those large transactions leave a paper trail and get flagged up, "if" they decide to investigate its very easy to be singled out from the crowd. They could argue than your SB has become the main source of income or even act as insurance against your trades in shares account or cfd by using SB and therefore all should be treated equally for tax purposes. 

ofcourse none of it may matter because hmrc may not care or have the manpower to go after small fishes in the pond. 

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13 hours ago, eastside said:

I just wanted to add given many people have lost jobs due to lockdowns and resorted to SB trading full time and the industry sells SB product as tax-free to the public. therefore profits from SB are never declared during self-assessments.

The way i understand is if you do not have any other means of income other than trading AND you are winning substantial sums of money from spread betting, then you could be potentially/technically taxed on profits from spread betting. I say technically/potentially because when those large transactions leave a paper trail and get flagged up, "if" they decide to investigate its very easy to be singled out from the crowd. They could argue than your SB has become the main source of income or even act as insurance against your trades in shares account or cfd by using SB and therefore all should be treated equally for tax purposes. 

ofcourse none of it may matter because hmrc may not care or have the manpower to go after small fishes in the pond. 

Lets assume that did happen - they'd have to or should change wording to taxable - once that happens you then create a LTD co and trade for a living through that legal entity, if trading profits are taxable as they are with CFD's then losses/trading costs, commissions, spreads etc are a business expense to which you can offset against profits - I reckon 90-95% of people trading end up losing all their money at some point, that's a huge amount of losses to offset against taxation - I doubt they'd look at it which is why they allow it to be tax-free

This is why you should (when funds permit) have S&S ISA and SIP*P accounts - they are virtually tax-free and def tax free from a capital gains aspect

The only thing is inside them is you can't get much leverage as you're partially limited to what you can and can't trade - but if you build up a sizeable account, then the gains made inside ISA/SIPP* can be withdrawn as income (you can't access SIPP money until min age 55)

But you can trade many many things inside them just as you would SB'ing 

This is why 95% of my Investable funds are inside my ISA and SIPP - and i draw my "income" from my ISA 

*Income drawn down from a SIPP is taxable after you've taken the 25% tax-free cash - but the investment growth inside is not subject to capital gains tax etc

I used to be a financial adviser - you'll always be subject to tax rules, you just need to work out what's best for you 

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