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bigduckontax, Accountant
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Up until now I have been trading forex via a spreadbetting

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Up until now I have been trading forex via a spreadbetting account. I now, however, wish to trade 'spot' forex which, I understand is liable to CGT. If I then draw down money from my trading account each month as an income, would this then be liable to Income Tax?
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. This is classed as gambling and outside the scope of UK taxation. Here is the opinion [edited]: 'Forex trading tax laws in the U.K. are much more trader-friendly.Currently, spread betting profits are not taxed in the U.K., and many U.K. brokers offer retail forex demo and regular accounts in a spread betting structure. This means a trader can trade the forex market and be free from paying taxes; thus, forex trading is tax-free!This is incredibly positive for profitable forex traders in the U.K.The drawback to spread betting is that a trader cannot claim trading losses against his other personal income.Also, if a trader is managing funds or trading for an institution there are many other tax laws that one may have to abide by.However, if a trader stays with spread betting, no taxes need to be paid on profits. There are different pieces of legislation in process that could change forex tax laws very soon.' I would advise that you do not do this through your own limited company as companies are liable to Corporation Tax (CT) on forex gains. If you are using Contracts for Difference be careful as profits there are taxable under the Capital Gains Tax (CGT) regime. Gains are taxed at 18% or 28% or a combination of the two rates depending on your income including the gains in the tax year they are made. You do have an Annual Exempt Amount (AEA) of 11.1K to offset any gains. I do hope that I have been able to shed some light on your situation.
Customer: replied 2 years ago.
Hello Keith, I think perhaps I didn't explain my question well enough. I am a private retail trader and wish to go over to a 'professional' account which is not spreadbetting. As such, I am advised by my broker that any profits in this new account would be liable to Capital Gains Tax. So far so good. My question is if I then drew down money each month from this new account as an income would it be liable to income tax as well as the CGT?
Your broker is correct. Drawing down would not expose you to Income Tax. However, continuing to run spread betting would appear to be a better option as it is tax free except for CsFD.
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Customer: replied 2 years ago.
The problem with spreadbetting is the brokers who provide spreadbetting platforms generally speaking do not provide Direct Market Access but 'mirror' what the market prices are plus add on their bit to the spread and therefore can manipulate their prices to suit themselves not the trader! When you start trading at more than say £10/point slippage becomes a real problem!
Customer: replied 2 years ago.
Many thanks for your advice. It has put my mind at rest.
I appreciate your problem! You will not be getting the best price and suspect that your name is ***** *****! However, might not CGT eat into your profits to the extent that will equate to the brokers' 'squeeze?' A bit of time with a wet towel round the head and the backs of several envelopes seems called for!
Thank you for your support.
And your generous bonus.