Confused about tax on winnings?

[ruthlessimon]

SNAP

People should focus on just getting above the income threshold first - then worry about tax!!

[ShaunWhite]

So why hasn't it been introduced since the review in 2013?

How the hell should I know I'm not spreadsheet Phil. I'm just saying that tax credits aren't a refund, they're an offset against next years gains...and that tax laws can change.

If I had to guess I say it's because >half of the Lords & Commons like a bit of financial spread betting on the side, with the benefit of their insider info.

[ruthlessimon]

If I had to guess I say it's because >half of the Lords & Commons like a bit of financial spread betting on the side, with the benefit of their insider info.

Exactly (& plenty of nice dinners) so watcha worryin about

[Derek27]

This thread's moved fast! Have you lot taken the day off trading?

[firlandsfarm]

"It's also a pretty standard part of the UK taxation system that if there is going to be tax charged on the income or profits of something then there will also be an equal allowance against losses on doing that same thing.

Have you discussed that with any BTL landlords?

So, if we introduced a tax on betting winnings we would also need to have a system of credits or allowances for betting losses. And here's the problem with that idea: betting is a less than zero sum game. The winnings of any person or group of people are obviously the losses of all other people betting. So tax charged would be equal to tax credits gained. But it's worse than that as the bookies are also getting their slice in the middle. Meaning that total winnings are less than total losses. So our credits and allowances for losses would be higher than any revenue gained from the winners.

Tim I am not suggesting they may tax betting as such and I'm not even suggesting they will tax anyone. They won't tax general betting as an income because your points would be totally valid but they don't apply if they only tax 'trading' because they wouldn't be giving loss offsets to all the punters who do not 'trade'. All I'm saying in recognition of this thread's subject is it could be an attractive target within certain parameters ('trading', however they define it). It could have political rewards. It would bring a consistency with other financial trading. It would give them negotiating points to trade with the bookmakers (who are taxed on their trading) in the future and would not be difficult to implement. From my time in taxation and investment I have seen too many times when it's been said "they can never do that" but they did. And if you make a loss as a trader and try to argue you were trading to get the loss offset against other earned income then unless you have previous years of profit it is very hard to get them to approve the loss, they will say you have a hobby not a trade! Please believe me, I've been there many times on behalf of clients.

This is not a subject balanced on arguments of "how difficult it would be" nor "they can't by law". It would be easy for them to define a trader to fit their purpose, put the onus on the exchanges to provide the data and change the law to bring the trading of bets within the tax system. The law seems to support us because they tried to claim frequent betting was a trade but what if they simply put an additional clause in a Finance Act that says "taxpayers who do [this] will in future be taxed at [this]". Suddenly the law is on their side. And the activities of today have no resemblance to the activities of 90 or so years ago so even the current law could be tested. It's not a slam dunk either way and is a subject being discussed in websites. If I was still working I wouldn't be surprised if I heard there was a test case.

[firlandsfarm]

If I had to guess I say it's because >half of the Lords & Commons like a bit of financial spread betting on the side, with the benefit of their insider info.

Oh you cynical beast

[ShaunWhite]

This thread's moved fast! Have you lot taken the day off trading?

There's nothing like talk of income tax to get a few sphincters twitching

[ruthlessimon]

Have you discussed that with any BTL landlords?

I just copied it straight from bits of the Forbes article on it: https://www.forbes.com/sites/timworstal ... eed808a2f2

.. so no I haven't

I remember an older thread going into the difference between gambling & trading - but I think it's really really really difficult to differentiate - if there even is a difference

[firlandsfarm]

There's nothing like talk of income tax to get a few sphincters twitching

Yeah but there's nothing to worry about, it is only a temporary tax, finally reintroduced in 1842 to fund necessary expenditure on the railways ... how are those railways?

[firlandsfarm]

I just copied it straight from bits of the Forbes article on it: https://www.forbes.com/sites/timworstal ... eed808a2f2

So you are a plagiariser not called Tim!

I remember an older thread going into the difference between gambling & trading - but I think it's really really really difficult to differentiate - if there even is a difference

I would differentiate based on a number of bets filter and a correlation between backing and laying. Your ordinary John doesn't place say 500 back bets and a corresponding 500 lay bets a week!

I also see that in Canada (I think) they have been debating that if the bets are placed manually it's unlikely to be trading but if placed by a BOT it increases the chances of it being trading!

Oh and I disagree with gambling ... it's gambling if it's a game of pure chance (or selected by a pin) but if it is an expression of an element of skill then it's betting. The odds given on a number coming up in roulette is 35/1 regardless of the number ... but I've never seen a 10 horse race with each horse priced at 9/1, there is a skill in assessing which horse is more likely to win. You can bet West Brom will beat Manure but you can't bet number 10 will come up next spin, you can only hope.

[ruthlessimon]

So you are a plagiariser not called Tim!

How else am I meant to quote someone?

it's gambling if it's a game of pure chance, but if it is an expression of an element of skill then it's betting.

Imo the majority of "trading strategies" are no better than pure chance - & I think the extreme failure rate is proof of this! i.e. if I back every fav @ 5mins & exit @ 1mins, that's classed as skill?

[firlandsfarm]

How else am I meant to quote someone?

I thought you were signing off your post as Tim

Imo the majority of "trading strategies" are no better than pure chance - & I think the extreme failure rate is proof of this! i.e. if I back every fav @ 5mins & exit @ 1mins, that's classed as skill?

Agreed but I was thinking that when someone like Peter opens a trade he is not gambling on the price movement. A fixed strategy trading the same thing blindly is gambling but if intensive reasearch has been conducted and can show that back every fav @ 5mins & exit @ 1mins is profitable then there is an element of skill, but unlikely in the example you chose

[ShaunWhite]

a temporary tax, finally reintroduced in 1842 to fund necessary expenditure on the railways ... how are those railways?

And income tax was a temporary tax to fund the Napoleonic war....how are things with the Europeans ?

[wearthefoxhat]

How do the good gambling people in the United States manage?

Sports betting, Poker, Horse Race and Casino winnings are all taxable income. You even get your picture taken on the horse track if you win over a certain amount (I think it's $5k), near the pay out window!

https://www.efile.com/taxable-gambling- ... ome-taxes/

Wouldn't take much of a tweak for the UK to fall in line at some time.

Theoretically, you could report your winnings year on year anyway. Use an accountant that knows how to fudge/present your figures, along with any other income over the tax year. That way you're covered and it's up to the HMRC to decide. (we already know their decision).

[firlandsfarm]

And income tax was a temporary tax to fund the Napoleonic war....how are things with the Europeans ?

Yes and it's early introductions were temporary but after it's final (temporary) reintroduction in 1842 it has stayed! I blame the Europeans (especially the French) for everything