Spread Betting Gains and the Tax Man

In the United Kingdom any income from spread betting and fixed odds trading is regarded as gambling as opposed to trading and therefore is not subject to tax.

But in theory spread betting gains aren’t really an income and therefore should not be accounted for on a tax return, however my accountant has always been adamant that I should declare all income.

Also, I know of one ‘professional’ spread better who made the assumption that he didn’t need to declare his spread betting winnings but was nevertheless hounded for two years by HMRC. They were eventually slapped down (HMRC) by a judge but he had to pay thousands to a lawyer to defend himself. Be warned, the concept of ‘the law’ as we know it does not sit well with HM Revenue & Customs. As far as they are concerned, everything is interpretive! This precedent is sufficient for me not to want to go through the same ordeal. UFABET

In reality the spread betting companies already pay a gambling tax which is why traders in the UK and Ireland don’t pay any additional taxes on winnings – the catch is of course that you can’t claim for losses!

However, let’s come to the other side, the man who bets with the bookmaker, and that is this case. These are mere bets. Each time he puts on his money, at whatever may be the starting price. I do not think he could be said to organise his effort in the same way as a bookmaker organises his. I do not think the subject matter from his point of view is susceptible of it. In effect all he is doing is just what a man does who is a skillful player at cards, who plays every day. He trades today and he trades tomorrow and he trades the next day and he is skillful on each of the three days, more skillful on the whole than the people with whom he plays, and he wins. But I do not think that you can find, in his case, any conception arising in which his individual operations can be said to be merged in the way that particular operations are merged in the conception of a trade. I think all you can say of that man…is that he is addicted to betting…There is no tax on a habit. I do not think ‘habitual’ or even ‘systematic’ fully describes what is essential in the phrase ‘trade, adventure, profession or vocation.’

Having said that I have no problem with the inland revenue and spread betting. For the last 3 years or so years I’ve declared all my gains as non taxable gambling winnings (quoting and enclosing a copy of their own exemption notes on spread betting and gambling winnings). I declare all profits because the law states that you must declare ALL income. It is for the inland revenue to decide on what parts of your income they will claim tax. So I simply declare the gains in the additional information box. I advise them that the total sum of £x is winnings from gambling – horse racing, financial spreadbetting, lottery and football scores. In fact it’s all spread betting. I offer my records for inspection but they have never taken me up on the offer or asked me for any payment.