Is profit from spread betting tax free?

With everybody watching their pennies during these tough financial times, every person needs to make the most of their income and minimise tax expenditure wherever possible, so is the profit from spread betting really tax free?

The money made from spread betting is tax free on one proviso, and that is providing that the income from financial spread trading is not your only or main source of income. If you make a living from spread betting, then the income is indeed taxable.

So, when you open a spread betting account avoid being tempted to show off by putting your job description as a ‘trader’ or ‘day trader’.

If you were to ask the Inland Revenue or perhaps an accountant if the profit from financial spread betting was taxable, then they would more than likely tell you that if you can live off another income source that you do pay tax on, then the Inland Revenue cannot tax you on your spread betting income.

Be warned though, your tax advantages may be null and void should you give up your job or other source of income and begin to live off your spread betting profits then you may be open to challenge.

Having said that, don’t let it put you off! If you were to earn enough money from financial spread trading to live off, then the chances are you’ll be making enough money to hire a good accountant to minimise any taxes you should pay.