Will spread betting become taxable?

One of the great attractions to spread betting is that any profit made is completely free of taxes or stamp duty, which means you can effectively use shares, currencies and commodities to make money without the commissions, fees and capital gains taxes usually involved when you actually purchase or sell the assets.

Whether or not spread trading will ever become taxable is of course a person opinion however, the general rule of thought seems to be that the simple answer is ‘it is highly unlikely’.

The general reasoning behind this point of view is that more money is lost through spread betting than is won – the reasons for this have been covered many times in previous articles. If the gains were to become taxable then it stands to reason that any losses made through spread trading would therefore be tax deductible and thus the government would actually lose out if it were to begin taxing profits made through spread trading.

On a separate point and not one that really affects the spread trader, is that if spread betting were to become taxable then the spread betting companies would dispute the ‘gaming duty levy’ that they pay.

Reports show that around 80 per cent of clients lose money and so the government would lose the tax they currently take from the spread betting companies which would only be made up if every individual winner actually declared their winners. Some winning clients are foreign and most people have a tax free allowance anyway.  Spread betting winnings would also be tax deductible and could be offset against other liabilities. Hence the government would lose out and so spread betting gains should continue to be tax free.