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1)Do profits from Forex Trading constitute as earned income

Customer Question

1)Do profits from Forex Trading constitute as earned income and is this a taxable income?
2)Are profits from Binary Options trading treated as taxable income?
Submitted: 10 months ago.
Category: Tax
Expert:  bigduckontax replied 10 months ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Forex Trading and Binary Options trading are classed as gambling and thus do not form part of your taxable income. There is always an outside possibility that should you spend all day glued to your computer trading HMRC might classify that as a business and make profits subject to Income Tax. This, however, is hihjly unlikely. I do hope that you have found my reply of assistance.
Customer: replied 10 months ago.

Thank you Keith.

Is there a specific threshold as I have been told by another trader that he has to pay income tax on forex trading. Are there specific rules on this please set out by the HMRC?

Expert:  bigduckontax replied 10 months ago.
Forex tax free has to be spread betting or Binary or ITALY. If you are using a bookmaking platform for investment in CFD's, Forex etc you should be outside the scope of UK taxation.
Customer: replied 10 months ago.

Ok thanks. Does it fall under CGT?

Expert:  bigduckontax replied 10 months ago.
No, the only possible tax exposure is as I explained to you if you spent all and every day working on the system. Please be so kind as to rate me before you leave the Just Answer site.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3374
Experience: FCCA FCMA CGMA ACIS
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Customer: replied 10 months ago.

Sorry I just found this link from another similar question on Just Answer and the adviser stated that it would be taxable under CGT?

Please can you check:

http://www.justanswer.co.uk/tax/7x9fh-intending-start-trading-forex-living-assumed.html

Expert:  bigduckontax replied 10 months ago.
CGT is a tad questionable and in any event it is the frequency of trading which is the acid test. Thank you for your support.
Customer: replied 10 months ago.

In terms of frequency, if I trade everyday but I have another business?

If I make profits everyday, how can one prove/disprove the time spent trading and would the HMRC not judge against profits/loss or would they not classify it as full time if I have another business?

Expert:  bigduckontax replied 10 months ago.
Remember that you can also make losses! You have another job, so your Forex activities could never be classed as a business.

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