Forex for a trader
Forex tax rate uk

Forex tax rate ukHow To File Taxes As A Forex Trader. Most new traders never have concern themselves with finding out the specifics of taxes in relation to forex trading. All of a new trader's focus is simply on learning to trade profitably! However, at some point, traders must learn how to account for their trading activity and how to file taxes-hopefully filing taxes is to account for forex gains, but even if there are losses on the year, a trader should file them with the proper national governmental authority. Filing taxes on forex profits and losses can be a bit confusing for new traders. In the United States there are a few options for Forex Trader . First of all, the explosion of the retail forex market has caused the IRS to fall behind the curve in many ways, so the current rules that are in place concerning forex tax reporting could change any time. Regulations are continually being instituted in the forex market, so always make sure you confer with a tax professional before taking any steps in filing your taxes. There are essentially two sections defined by the IRS that apply to forex traders - section 988 and section 1256. Section 1256 is the standard 6040 capital gains tax treatment. This is the most common way that forex traders file forex profits. Under this tax treatment, 60% of total capital gains are taxed at 15% and the remaining 40% of total capital gains are taxed at your current income tax bracket, which could currently be as high as 35%. Profitable traders prefer to report forex trading profits under section 1256 because it offers a greater tax break than section 988. Losing trader tend to prefer section 988 because there is no capital-loss limitation, which allows for full standard loss treatment against any income. This will help a trader take full advantage of trading losses in order to decrease taxable income. In order to take advantage of section 1256, a trader must opt-out of section 988, but currently the IRS does not require a trader to file anything to report that he is opting out. Also, if your forex account is huge and you lose more than $2 million in any single tax year, you may qualify to file a Form 886. If your broker is based in the United States, you will receive a 1099 at the end of the year reporting your total gainslosses. This number should be used to file taxes under either section 1256 or section 988. Forex trading tax laws in the U. K. are much more trader-friendly than the United States. 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. One should make sure that one confers with a tax professional to ensure he is abiding by all proper laws. Another option that carries a higher degree of risk is creating an offshore business that engages in forex trading in a country with little to no forex taxation; then, pay yourself a small salary to live on each year, which would be taxed in the country where you are a citizen. There are many types of forex software that can help you learn to trade the forex market. This type of business formation is very risky because you must make sure you are abiding 100% by tax laws and not slipping into illegal activities. This type of operation should be carried out only with the help of a tax professional, and it may be best to confirm with at least 2 tax professionals to make sure you are making the right decisions. How Currency Traders Can Reduce Their Taxes. The foreign exchange market, or forex, as it is more commonly called, is the biggest market in the world with over $4 trillion changing hands every single day. To put that into perspective, it is 12 times greater than the average daily turnover on the global equity markets and more than 50 times greater than the average daily turnover on the NYSE.

Trading in foreign currencies has been around for thousands of years. In fact, some of the first known currency traders were the Middle Eastern moneychangers who exchanged coins to facilitate trade. Given a market this size, it is no surprise that the taxation of forex remains a complexity to most traders and tax professionals. The Tax Reform Act of 1986 instituted the provisions covering Section 988 transactions. Section 988 transactions, the default method of taxation for currency traders, treats the gains or losses from forex transactions as ordinary gains or ordinary losses. If you have forex gains, they are taxed as ordinary income, subject to which ever tax bracket you fall under. Let's look at an example: Joe Trader is married and makes $100,000 salary a year. He has a good year trading FOREX, making $50,000 for the year. Joe falls in the 25% tax bracket, making his tax due on his FOREX gain $12,500 ($50,000 X 25%). BUT WHAT ABOUT FOREX LOSSES? If you lose money trading FOREX, your losses are treated as ordinary losses, and can be used to offset any other income on your tax return. Let's use Joe as an example again: Instead of making $50,000, Joe loses $50,000 trading forex. The $50,000 loss can be taken against his W-2 income, making his taxable income $50,000 ($100,000 - $50,000). If his forex loss were a capital loss instead of an ordinary loss, Joe would only be able to take $3,000 off of his taxes, making his taxable income $97,000. The remaining $47,000 loss would have to be carried forward and used up in future years. So what type of FOREX trader benefits from Section 988 tax treatment? In my opinion, if a trader is not consistently profitable and has other earned income on their tax return, they should stay under the Section 988 taxation to be able to fully utilize any losses that come from FOREX trading. If you are not consistently profitable in your FOREX trading AND you have no other earned income, you should consider doing what profitable FOREX traders should do: opt out of Section 988 tax treatment.

I'll explain why at the end of the article. IRC section 988(a) (1) (B) provides FOREX traders with a way to opt out of the ordinary gainloss tax treatment: "Except as provided in regulations, a taxpayer may elect to treat any foreign currency gain or loss. as a capital gain or loss (as the case may be) if the taxpayer makes such election and identifies such transaction before the close of the day on which such transaction is entered into". This exception gives forex traders the option to opt out of ordinary gainloss treatment; making your forex trades taxed the same as section 1256 contracts. Section 1256 contracts are taxed at a more beneficial rate of 6040, 60% taxed at long term capital gains rates and 40% taxed at short term capital gains rates. The maximum tax rate on ordinary income currently is 39.6%. The maximum tax rate on Section 1256 contracts by comparison is 28%, almost a 30% reduction in taxation on the gains! Using our example above, if Joe had opted out of the Section 988 tax treatment, his tax rate on his $50,000 FOREX gain at a 6040 rate would drop 24% (19% vs. 25%), saving him $3,000 in taxes that year! Here is a comparison of ordinary tax rates vs. the 6040 tax rate using 2013 tax brackets: The IRS requires a trader to make the election to opt out of Section 988 tax treatment internally, meaning you make the opt out election in your own corporate books or records. You do not have to notify the IRS in advance, as you do if you were making the mark to market election. I'd personally suggest having your opt out election notarized, which would help solidify your claim of a timely election if you got audited. Opting out of Section 988 tax treatment for forex traders is a no-brainer decision for profitable traders due to the tax savings. However, it also makes sense for traders who are not consistently profitable yet but also don't have any earned income on their tax returns. If a trader has an ordinary loss and no earned income to offset it against, the ordinary loss ends up being wasted as it cannot be carried forward to future tax years. If you opt out and elect Section 1256 tax treatment, the loss can be carried forward and used against future capital gains. If you are still uncertain as to whether to opt out or not, please seek out the advice of a knowledgeable trader tax specialists to assist you with this decision.

Forex trading and UK tax. Forex trading and UK tax. This is a discussion on Forex trading and UK tax within the Forex Brokers forums, part of the Commercial category; As a newbie I have just found out that in order to trade Forex tax free it has to be . As a newbie I have just found out that in order to trade Forex tax free it has to be via a Spread betting companyaccount and not through a Forex Trader. I am now familiar with several trading systems and MT4 but have now discovered that it is not possible to Spread Bet with MT4 only forex trade. I have just opened a demo spread betting account with Capital Spreads and the interface to put it politely is disappointing. So what do others do? The opions as I see it are:- Use a Forex Trader and take your own decision regarding tax declarations Use a spread betting company but only for placing trades and use a demo MT4 account with a Forex trader for analysis Use a signal service and not bother with any analysis just put on the trades as dictated by the signal provider on a spread betting account. Help would be most appreciated from those of you experienced enough to have gone through this dilemma. As a newbie I have just found out that in order to trade Forex tax free it has to be via a Spread betting companyaccount and not through a Forex Trader. I am now familiar with several trading systems and MT4 but have now discovered that it is not possible to Spread Bet with MT4 only forex trade. I have just opened a demo spread betting account with Capital Spreads and the interface to put it politely is disappointing. So what do others do? The opions as I see it are:- Use a Forex Trader and take your own decision regarding tax declarations Use a spread betting company but only for placing trades and use a demo MT4 account with a Forex trader for analysis Use a signal service and not bother with any analysis just put on the trades as dictated by the signal provider on a spread betting account. Help would be most appreciated from those of you experienced enough to have gone through this dilemma. Thanks for the reply. Not sure what you mean by Quantitative Trading? As I understand it if I trade with a Forex Broker then my profits (optimist!

) are subject to Capital Gains tax and not income tax. Since the CG allowance is currently Ј9600 per person in this tax year I thought it might be worthwhile sticking with Alpari using MT4 until such time as I make so much money that I then have to move over to spread betting. One big advantage seems to be that starting with a relatively small amount and risking say 3% of capital per trade as I have had recommended to me on many occasions it is difficult to find a spread betting company that allows bets of such a small amount per pip whereas with a micro account you can get down to Ј0.25 per pip or less which is the sort of level that I will start at depending on the stop loss I choose to use. Quantitative Trading: using mathematical formulas to trade (i. e. creating an Expert Advisor using MetaTrader 4 platform) sticking with Alpari using MT4 (not a bad option) Finally up your size slowly and when your system is working go wild. Will I be taxed as a forex trader if its my only income? As you're no doubt aware there are two broad options for being taxed on your forex profits. You could either be a forex trader or a forex investor. The two are completely different in tax terms (its essentially the same difference as between a property investor who purchases property to rent or a property developer who purchases property to renovate and sell). Forex traders are subject to income tax. Potentially at 40% and even 50% after April 2010 if they have profits over ?150K. Investors are subject to CGT and the 18% CGT rate. They'll also have the annual CGT exemption of around ?10K to offset. Traders have a wider expensededuction offset are classed as self employed. This means if they had no other income they'd also need to account for national insurance (class 2 at around ?2.00 per week) and class 4 at 8% on profits above the primary threshold). So essentially if you're a basic rate tax payer its the difference between 18% CGT and 28% income tax and NIC. If you're a higher rate taxpayer the rate difference is 40% v 18%. There's also the allowancesexpenses etc to take into account. For many, trader status would not be advantageous, at least not unless there were losses, so avoiding being taxed as a forex trader would be advisable.

Establishing when you are and aren't a forex trader is not straightforward though. In particular one of the questions we're frequently asked is whether if forex income is your only income this will make you a trader? Just because it's you only 'income' would not automatically make it trading income. The whole nature of your activity would need to be assessed. The general rule with forex activities just as shares, derivatives and other financial assets is that you are an investor. There would need to be an organised trading operation before you'd be classed as a trader. In the case of an individual (ie not a company) this is more difficult to apply. Given that under self assessment it is for you to self assess your own tax liability you should determine the status of your forex activity. In most cases completing the return on the basis of a forex investor would also be accepted by HMRC. The fact that the forex income is your only income would not therefore mean anything by itself. You could for instance have no other income but earn generous profits from a minimal number of trades per week and essentially be 'lucky' with your investments.

By contrast you could have another occupation, trade frequently with sophisticated risk management and a commercial set up and have a better chance of being classed as a trader. Foreign Currency and Currency Exchange Rates. You must express the amounts you report on your U. S. tax return in U. S. dollars. If you receive all or part of your income or pay some or all of your expenses in foreign currency, you must translate the foreign currency into U. S. dollars. How you do this depends on your functional currency. Your functional currency generally is the U. S. dollar unless you are required to use the currency of a foreign country. Note: Payments of U. S. tax must be remitted to the U. S. Internal Revenue Service (IRS) in U. S. dollars. You must make all federal income tax determinations in your functional currency. The U. S. dollar is the functional currency for all taxpayers except some qualified business units (QBUs). A QBU is a separate and clearly identified unit of a trade or business that maintains separate books and records. Even if you have a QBU, your functional currency is the dollar if any of the following apply. Make all income tax determinations in your functional currency. If your functional currency is the U. S. dollar, you must immediately translate into dollars all items of income, expense, etc. (including taxes), that you receive, pay, or accrue in a foreign currency and that will affect computation of your income tax. Use the exchange rate prevailing when you receive, pay, or accrue the item.

If there is more than one exchange rate, use the one that most properly reflects your income. You can generally get exchange rates from banks and U. S. Embassies. If your functional currency is not the U. S. dollar, make all income tax determinations in your functional currency. At the end of the year, translate the results, such as income or loss, into U. S. dollars to report on your income tax return. Currency Exchange Rates. An exchange rate is the rate at which one currency may be converted into another, also called rate of exchange of foreign exchange rate or currency exchange rate. Below are government and external resources that provide currency exchange rates. The New 2018 UK Income Tax Rates and Brackets. The UK government announces changes to the income tax rates and amended tax brackets every Autumn. But the changes only take effect on the 6 April 2018, which is when the new UK tax year starts. Here’s what changed during the last Autumn budget and what you can expect to pay in taxes in the new financial year. Try MileIQ for the United Kingdom. What Income Tax Rate Changes did the Government Announce in the Autumn Budget 2017? The government announced the following important changes to the tax rates in the Autumn Budget 2017: Try MileIQ for the United Kingdom. Revised “main” rates, which apply to salaries and self-employment income A revised dividend allowance, which applies if you take dividend income, for example, because you do business as a limited liability company An increase in the marriage allowance, the tax deduction you can claim if you’re married or in a civil partnership Unfortunately, approved vehicle allowance payment rates will remain the same for the time being.

What are the New UK Income Tax Rates and Brackets for 201819? These rates only apply if you live in England, Wales or Northern Ireland. The devolved Scottish government sets its own income tax rates, which we’ll deal with separately. Try MileIQ for the United Kingdom. How do the New Income Tax Rates Compare to the Rates and Brackets for 201718 ? This means your tax situation could change in the following ways in the 201819 tax year: You’ll get an extra ?350 tax-free as part of your personal allowance You can apply the lowest tax bracket to an additional ?1,000 If you’re on a low income, you’ll pay less tax overall Similarly, if you’re in the basic rate tax bracket, you’ll pay less tax overall. Example: How Will the Amended Tax Brackets Affect How Much Tax I’ll Pay Next Year? Let’s say you earn ?46,000 a year. You have no other income. Under the current tax rates, your first ?11,500 is tax-free. You’d pay tax at 20 percent on the next ?33,500 and a whopping 40 percent on the remaining ?1,000. Try MileIQ for the United Kingdom. This means your income tax liability for 2017 18 would be ?7,100. In contrast, in the next tax year, your first ?11,850 would be tax-free. And you’d pay tax at 20 percent on all your taxable income. This means your tax bill would be ?6,830. That’s ?270 a year more in your pocket. What Other Major Changes to the Income Tax Rates did the Government Announce in the Autumn Budget?

Aside from changes to the “main” income tax rates, the government also announced a major change to the dividend allowance. If you do business as a limited liability company, you probably take part of your income as a dividend. This means the change could affect your tax bill significantly. How Has the Dividend Allowance Changed? The tax-free dividend allowance will go down starting on the 6 April 2018. As things stand, you can take a dividend of up to ?5,000 a year tax-free. But, as from the 6 April 2018, you’ll only be able to take ?2,000 a year as a dividend without paying any tax. How Will The Dividend Allowance Reduction Affect Me? This will depend on how much income you make overall. Try MileIQ for the United Kingdom. Let’s say you earn ?30,000 in total. In a typical scenario, you’d take a salary of ?8,160, so you won’t have to pay income tax or National Insurance but still qualify for National Insurance credits. And you’d take the rest as a dividend, in this case, ?21,840. Under the current system, the first ?5,000 would be tax-free. You’d pay dividend tax on the remaining ?16,840 at the following rates: Forex Taxation Basics. For beginner forex traders, the goal is simply to make successful trades. In a market where profits – and losses – can be realized in the blink of an eye, many investors just want to "try their hand" before thinking long-term. While forex can be a confusing field to master, filing taxes in the U. S. for your profitloss ratio can be reminiscent of the Wild West.

Here is a breakdown of what you should know – even before your first trade. For Options and Futures Investors. Forex options andor futures are grouped in what are known as IRC Section 1256 contracts. These IRS-sanctioned contracts mean traders get a lower 6040 tax consideration. This means that 60% of gains or losses are counted as long-term capital gainslosses and the remaining 40% as short term. The two main benefits of this tax treatment are: Time Many forex futuresoptions traders make several transactions per day. Of these trades, up to 60% can be counted as long-term capital gainslosses. Tax Rate When trading stocks held less than one year, investors are taxed at the same rate as their ordinary income. When trading futures or options, investors are taxed at a 23% rate (calculated as 60% long-term x 15% max rate + 40% short-term rate x max income tax rate). For Over-the-Counter (OTC) Investors. Most spot traders are taxed according to IRC Section 988 contracts. These contracts are for foreign exchange transactions settled within two days, making them open to ordinary losses and gains as reported to the IRS. If you trade spot forex you will likely automatically be grouped in this category.

The main benefit of this tax treatment is loss protection. If you experience net losses through your year-end trading, being categorized as a "988 trader" serves as a large benefit. As in the 1,256 contract, you can count all of your losses as "ordinary losses" instead of just the first $3,000. Which Contract to Choose. Now comes the tricky part: deciding how to file taxes for your situation. What makes foreign-exchange filing confusing is that while optionsfutures and OTC are grouped separately, you as the investor can pick either a 1256 or 988 contract. You have to decide before January 1 of the trading year. IRC 988 contracts are simpler than IRC 1256 contracts in that the tax rate remains constant for both gains and losses – an ideal situation for losses. Notably, 1256 contracts, while more complex, offer more savings for a trader with net gains – 12% more. The most significant difference between the two is that of anticipated gains and losses. At most accounting firms you will be subject to 988 contracts if you are a spot trader and 1256 contracts if you are a futures trader. The key factor is talking with your accountant before investing. Once you begin trading you cannot switch from 988 to 1256 or vice versa. Most traders will anticipate net gains (why else trade?) so they will want to elect out of their 988 status and in to 1256 status.

To opt out of a 988 status you need to make an internal note in your books as well as file with your accountant. This complication intensifies if you trade stocks as well as currencies. Equity transactions are taxed differently and you may not be able to elect 988 or 1256 contracts, depending on your status. Keeping Track: Your Performance Record. Rather than rely on your brokerage statements, a more accurate and tax-friendly way of keeping track of profitloss is through your performance record. This is an IRS-approved formula for record keeping: Subtract your beginning assets from your end assets (net) Subtract cashdeposits (to your accounts) and add withdrawals (from your accounts) Subtract income from interest and add interest paid Add other trading expenses. The performance record formula will give you a more accurate depiction of your profitloss ratio and will make year-end filing easier for you and your accountant. When it comes to forex taxation there are a few things you will want to keep in mind, including: Deadlines for filing : In most cases, you are required to elect a type of tax situation by January 1. If you are a new trader, you can make this decision before your first trade – whether this is in January 1 or December 31. It is also worth noting that you can change your status mid-year, but only with IRS approval. Detailed record keeping : Keeping good records (and backups) can save you time when tax season approaches. This will give you more time to trade and less time to prepare taxes. Importance of paying : Some traders try to "beat the system" and earn a full or part-time income trading forex without paying taxes. Since over-the-counter trading is not registered with the Commodities Futures Trading Commission (CFTC) some traders think they can get away with it. Not only is this unethical, but the IRS will catch up eventually and tax avoidancefees will trump any taxes you owed. Trading forex is all about capitalizing on opportunities and increasing profit margins, so a wise trader will do the same when it comes to taxes.

Whether you are planning on making forex a career path or are interested in simply seeing how your strategy pans out, taking the time to file correctly can save you hundreds if not thousands in taxes, making it a transaction that's well worth the time. Income Tax rates and Personal Allowances. Current rates and allowances Previous tax years Income over ?100,000. Current rates and allowances. How much Income Tax you pay in each tax year depends on: how much of your income is above your Personal Allowance how much of your income falls within each tax band. The current tax year is from 6 April 2018 to 5 April 2019. Your tax-free Personal Allowance. The standard Personal Allowance is ?11,850, which is the amount of income you don’t have to pay tax on. Your Personal Allowance may be bigger if you claim Marriage Allowance or Blind Person’s Allowance. It’s smaller if your income is over ?100,000. Income Tax rates and bands. The table shows the tax rates you pay in each band if you have a standard Personal Allowance of ?11,850. Income tax bands are different if you live in Scotland. You can also see the rates and bands without the Personal Allowance. You don’t get a Personal Allowance on taxable income over ?123,700. If you’re employed or get a pension. your Personal Allowance and tax code how much tax you’ve paid in the current tax year how much you’re likely to pay for the rest of the year. You have tax-free allowances for: You may also have tax-free allowances for: your first ?1,000 of income from self-employment - this is your ‘trading allowance’ your first ?1,000 of income from property you rent (unless you’re using the Rent a Room Scheme) Find out whether you’re eligible for the trading and property allowances. You pay tax on any interest, dividends or income over your allowances.

Paying less Income Tax. You may be able to claim Income Tax reliefs if you’re eligible for them. If you’re married or in a civil partnership. You may be able to claim Marriage Allowance to reduce your partner’s tax if your income is less than the standard Personal Allowance. If you don’t claim Marriage Allowance and you or your partner were born before 6 April 1935, you may be able to claim Married Couple’s Allowance. Tax Strategies for Forex Traders. TradersAccounting. com. Forex: Know What You Trade to Avoid Tax Traps: Forex, the foreign currency exchange market, can be a lucrative one indeed for traders skilled in its dynamics. This worldwide network of government central banks, commercial and investment banks, hedge funds, international corporations and brokerage firms enables traders to capitalize on the rise and fall of a currency dollar volume that exceeds $1.4 trillion every day, making it the largest and most liquid of the world markets. But when income tax time rolls around, currency traders receive special treatment from the Internal Revenue Service, the subtleties of which can sometimes trip up the unsuspecting. Here’s a look at the tax landscape for forex traders, and why it may be a good idea to have a Traders Accounting tax professional help guide you through the twists and turns. Futures and Cash Forex. Forex is traded in two ways: as currency futures on regulated commodities exchanges, which fall under the tax rules of IRC Section 1256 contracts, or as cash forex on the unregulated interbank market, which fall under the special rules of IRC Section 988. Many forex traders are active in both markets. Because futures and cash forex are subject to different tax and accounting rules, it is important for forex traders to know which category each of their trades fall into so that each trade can be reported correctly to receive optimum tax advantage. Section 1256: The Advantageous Split.

Forex traders receive a significant tax advantage over securities traders under Section 1256: reporting capital gains on IRS Form 6781 (Gains and Losses from Section 1256 Contracts and Straddles) allows you to split your capital gains on Schedule D, with 60% taxed at the lower long-term capital gains rate (currently 15%) and 40% at the ordinary or short-term capital gains rate of up to 35%. That combined rate of 23% amounts to a 12% advantage over the ordinary (or short-term) rate. If you trade exclusively in forex futures, it’s smooth sailing come tax time; your trades fall under Section 1256 and automatically receive the 6040 split. But things get a little more complicated tax-wise if you dabble in cash forex, which is subject to Section 988 (Treatment of Certain Foreign Currency Transactions). Section 988: To Opt Out or Not? Section 988 was enacted as a way for the IRS to tax companies that earn income from fluctuations in foreign currency exchange rates as part of their normal course of business, such as buying foreign goods. Under this section, such gains or losses are reported and treated as interest income or expense for tax purposes, and do not receive the favorable 6040 split. Because forex futures do not trade in actual currencies, they do not fall under the special rules of Section 988. But as a currency trader, you are exposed daily to currency rate fluctuations, hence your trading activity would fall under the Section 988 provisions. But because currency traders consider these fluctuations part of their capital assets in the normal course of business, the IRS enables you to opt out of Section 988, and thereby retain the favorable 6040 split for these gains under Section 1256. The IRS requires that you note “internally” your intention to opt out of Section 988 before making the trades; you are not required to notify the IRS. Obviously, some traders bend this rule based on their year-end outcome, and there seems little inclination on the part of the IRS to crack down, at least so far. As a rule of thumb, if you have currency gains, you would benefit (reduce your tax on gains by 12 percent) by opting out of Section 988. If you have losses however, you may prefer to remain under Section 988’s ordinary loss treatment rather than the less favorable treatment under Section 1256. Tax Time: Tougher for Currency Traders. Forex futures traders tend to breeze through tax time; their brokerage firm sends them an IRS Form 1099, on which their aggregate profit or loss is listed on Line 9. But since currency traders don’t receive 1099s, you are left to find your own accounting and software solutions. Don’t be tempted to simply lump your currency trades in with your Section 1256 activity, a common temptation; these trades need to be separated into Section 988 reporting, and in cases of loss, you could wind up paying more tax than necessary.

As a fast-growing market segment, forex trading is almost certain to come under greater IRS scrutiny in the future. An experienced Traders Accounting tax professional can help you file in full compliance with IRS rules and make the most of your tax advantages. For more information, visit TradersAccounting. com. Join the newsletter and receive updates with news, analysis and trade ideas. Forex trading and UK tax. Forex trading and UK tax. This is a discussion on Forex trading and UK tax within the Forex Brokers forums, part of the Commercial category; As a newbie I have just found out that in order to trade Forex tax free it has to be . As a newbie I have just found out that in order to trade Forex tax free it has to be via a Spread betting companyaccount and not through a Forex Trader. I am now familiar with several trading systems and MT4 but have now discovered that it is not possible to Spread Bet with MT4 only forex trade. I have just opened a demo spread betting account with Capital Spreads and the interface to put it politely is disappointing. So what do others do? The opions as I see it are:- Use a Forex Trader and take your own decision regarding tax declarations Use a spread betting company but only for placing trades and use a demo MT4 account with a Forex trader for analysis Use a signal service and not bother with any analysis just put on the trades as dictated by the signal provider on a spread betting account. Help would be most appreciated from those of you experienced enough to have gone through this dilemma. As a newbie I have just found out that in order to trade Forex tax free it has to be via a Spread betting companyaccount and not through a Forex Trader. I am now familiar with several trading systems and MT4 but have now discovered that it is not possible to Spread Bet with MT4 only forex trade. I have just opened a demo spread betting account with Capital Spreads and the interface to put it politely is disappointing. So what do others do? The opions as I see it are:- Use a Forex Trader and take your own decision regarding tax declarations Use a spread betting company but only for placing trades and use a demo MT4 account with a Forex trader for analysis Use a signal service and not bother with any analysis just put on the trades as dictated by the signal provider on a spread betting account. Help would be most appreciated from those of you experienced enough to have gone through this dilemma. Thanks for the reply.

Not sure what you mean by Quantitative Trading? As I understand it if I trade with a Forex Broker then my profits (optimist!) are subject to Capital Gains tax and not income tax. Since the CG allowance is currently Ј9600 per person in this tax year I thought it might be worthwhile sticking with Alpari using MT4 until such time as I make so much money that I then have to move over to spread betting. One big advantage seems to be that starting with a relatively small amount and risking say 3% of capital per trade as I have had recommended to me on many occasions it is difficult to find a spread betting company that allows bets of such a small amount per pip whereas with a micro account you can get down to Ј0.25 per pip or less which is the sort of level that I will start at depending on the stop loss I choose to use. Quantitative Trading: using mathematical formulas to trade (i. e. creating an Expert Advisor using MetaTrader 4 platform) sticking with Alpari using MT4 (not a bad option) Finally up your size slowly and when your system is working go wild.



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