How to earn tax-free trading income and deduct your expenses! or How to have your cake AND eat it!
Warning: This information may be boring!
IMPORTANT
This general information must not be construed as professional tax advice. You should consult your personal accountant or tax consultant who can advise you personally having taking into account all your own particular circumstances. This information is given in good faith and is relevant under existing UK tax legislation.
As many UK traders know, UK income tax is normally payable on trading profits made from the foreign exchange market after relevant deduction of trading losses and expenses and any applicable personal allowances. Expenses allowable must be wholly and exclusively incurred as part of your trading activities and will include things like allowances for your trading screens and computers, IT maintenance, legal costs, telephone and broadband connection costs, FT, The Economist and other relevant subscriptions and periodicals, etc. However, currently under UK tax law any trading gains made from the foreign exchange markets through spread-betting activities are tax-free. What is more, this income does not even have to be declared to the tax man/woman. The unfortunate thing about spread-betting is that trading losses (and it’s a fact that the vast majority of spread-betters are losers!) are not deductible from tax. The double-whammy of spread-betting is that expenses incurred as a result of spread-bet trading activities are not usually deductible either. So how does one take advantage of these current rules? The simple answer is to trade using both direct forex trading and spread-bet trading! The cheeky advice is to ensure that all personal tax allowances and associated expenses of forex trading are covered by net profits made using direct forex market trading activities so that the net tax liability is very low, or zero. Your accountant will probably advise that not 100% of expenses would be allowable since not all expenses have been incurred as part of direct forex trading activities, so bear this in mind. Hopefully most your mega forex gains made through the LindencourtFX System are made through your spread-betting account and will therefore be tax-free. So you can have your cake and eat it! If you do not have a forex trading account yet, consider opening one through FX Rebates. A live forex trading account opened with one of the major forex brokers like SAXO Bank or FXCM via FX Rebates will also ensure that you get CASH REBATES on all your FX trades!