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Sam
Sam, Accountant
Category: Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I was employed in the tax year just ended until the end of

Resolved Question:

Hi there
I was employed in the tax year just ended until the end of June 2015. During this time I earned approx £20k and paid £4.5k in income tax. After this I basically became a house husband but traded forex in my spare time which was then my only potential source of income. I had 2 accounts, one was spreadbetting and lost £3.5K during the tax year and the other was a CFD which lost £1.5k during the same period.
I believe I will be due a tax rebate on my employed position but was wondering whether it would be worth registering for self assessment and trying to offset the losses from trading against the employed income?
Any help or advice would be greatly appreciated as it seems a grey area
Submitted: 1 year ago.
Category: Tax
Expert:  Sam replied 1 year ago.

Hi

Thanks for your question - I am Sam and I am one of the Uk tax experts here on Just Answer.

You are right you will be due a tax refund for unused tax allowances on the tax paid on you income but Forex trading is not treated by HMRC as a trade, so you cannot register the activity as self employed to have these losses claimed against your income position.

The only time spread betting is a trade is when you trade with others money or give advise to others for a fee - and that element would be liable to tax (and losses allowable) none of which seem to apply here. So you can not claim these losses as not deemed to be a considered trade.

Let me know if I can assist further

Thanks

Sam

Customer: replied 1 year ago.
Hi SamThanks for the quick response. I'm slightly confused as there seems to be lots of conflicting advice. My basic understanding was that spreadbetting forex in the UK is tax free provided it is not your primary source of income, in which case it would become taxable and that CFD's are not tax free and would attract Capital gains tax
Expert:  Sam replied 1 year ago.

HI

I can only advsie you on HMRCs stance on the subject (which is where my expertise comes from as I worked for them for 26 years) as its deemed to be betting so not taxable - its not a source of income its betting -

For the CFDs these do generally fall under capital gains but as you have not made a profit you could declare this loss (but its not available to offset against the income - it can only be offset against any future gains made) and unless any gains are in excess of £11,100 (Capital gain exemption allowance for the year) then you will not have a liability anyway and no need to declare the profits. But it would on reflection be prudent to declare the CFD loss for any future profits in excess of the capital gain exemption allowance.

Sorry for the confusion

Thanks

Sam

Customer: replied 1 year ago.
Thanks Sam. Appreciate declaring the CFD loss would be prudent but as it only for a relatively small amount then I think I will just write the lot off rather than start registering for self assessments and employment etc.
Seems like my best course of action would be switch all future trading to spreadbetting which remains tax exempt irrelevant of any monies earned.
On a final note would I need to contact HMRC about a rebate or will it happen naturally when they realise I have only earned £20k in the tax year and overpaid?Many thanks
Expert:  Sam replied 1 year ago.

Hi

Thanks for your response and I take note of your future intentions and agree this would e simpler.

re the refund as you are not working and not claiming benefits you can either wait to after 05/04/2017 to claim this tax refund (HMRC are not always up to speed with generating refunds in a timely fashion) or you can claim a part refund every 4 weeks by claiming an unemployment refund on form P50

Link here for P50 https://www.gov.uk/government/publications/income-tax-claiming-tax-back-when-you-have-stopped-working-p50

Then they will refund up to the current position with unused tax free allowances and then you claim every 4 weeks therafter until year end.

Let me know if I can assist further - but if you have all that you need, it would be appreciated if you could rate me for the level of service I have provided (or click accept)

Thanks

Sam

Customer: replied 1 year ago.
Hi Sam
Thanks you have been very helpful and I will be happy to rate you as excellent.
One final thing why would I have to wait until the end of 16/17 tax year to claim a refund that originates from 15/16?
Expert:  Sam replied 1 year ago.

Hi

I do apologise, then as its 2015/2016 you just make a claim now - write to HMRC with your P45 and advsie you had no further employment from June 2015 to 05/04/2016 - and they will deal with the refund due

Of course if you usually complete self assessment - then you make the claim through the completion of the return

Let me know if I can assist further - or if you have all that you need, then please do rate me for the level of service provided (or click accept)

Thanks

Sam

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