***
If you cannot be bothered to read this entire thread, please just read the paragraph below and comment on the limited information.
***

I've read too many discussion forums on this subject and following which I have called HMRC on this issue and they said any form of forex trading, regardless of whether you have a full time 9-5 job, is regarded as trading depending on the frequency and knowledge of the subject. They said it cannot be regarded as gambling as per spread forex trades are and is therefore liable to tax and that too, income tax not capital gains tax because it is regarded as "trading". Can someone in the UK who trades forex and has experiencing of dealing with HMRC please confirm their situation.

I have outlined my scenarios as follows:

Background to query
â¢I may casually on Sunday evenings, weekday evenings or occasionally during weekday lunch hours place some speculative forex positions with a currency broker to try and profit from a rise or fall in a particular currency e.g. GBP v Australian Dollar or US dollar. Most brokers will provide leverage to finance the position e.g. a £1m position will require me to put a deposit of 1% i.e. £10,000 as collateral. In addition to a profit or loss that materialises from the trade when it is closed, interest is either than earned or paid by me, depending on whether I buy the currency (going long) or sell the currency (going short). For the purpose of this example, letâs assume that the interest rate either way is £20 per day

â¢In terms of time spent dedicated to this âspeculative currency undertakingâ, it is difficult to quantify because I might place an automated limit order to buy or sell something which takes 2 minutes to do and then not look at again until I receive an email notification that the trade has executed and then place a limit order to close the trade with the target profit. Often, I may leave my iphone connected to the page that displays live information whether a transaction has been executed or not. As I have a day job, my time is devoted to that and not to currency trading. In the evenings, I may watch the prices whilst eating dinner / watching tv / playing with kids (but I am not glued to a trading screen)

â¢The volume of trading could be anything from £250,000 per leveraged trade to £1m per leveraged trade and positions could be opened and closed from 2 times per month to 20 times per month (I donât think the size of the trade should matter here because the broker is funding the majority of the position, and the frequency is no different to somebody buying and selling many times on the stock market in the month be it on margin trading or outright purchase)

Could you please advise how HMRC will view the following situations in relation to tax in respect of the above:

Scenario 1
â¢As an employee with a full time job and my primary job/income not related to the activity of forex at all, I regard this speculation as a means of personal gain or loss. I am not a professional forex trader. I am simply a person who reads the papers, financial news and makes an informed decision and may make or lose money on the trade. I would undertake the forex trade as an outright cash (spot) transaction with the broker who would finance it i.e. not a âspread tradeâ. This example is no different to someone who likes to undertake equity share trading as a frequent hobby. How is any tax treatment on profit/loss made here and is it regarded as income or capital gains? Is this regarded as gambling and therefore no taxes are paid on profits and no relief can be granted against losses?

Scenario 2
â¢As per situation 1, except this time the transaction is undertaken as a âspread tradeâ which is therefore regarded as gambling and therefore not subject to either income tax or CGT (again this is not my primary job), rather than as an outright cash (spot) purchase/sale by the broker. How is any tax and relief treatment on profit/loss made here and is it regarded as income or capital gains?

Scenario 3
â¢If I opened a forex account in the name of my wife and I undertake all forex trading on her behalf (under her name), and her full time job is as a dentist , how is any tax treatment on profit/loss made here and is it regarded as income or capital gains?

Scenario 4
â¢Because technically I have a religious issue with gambling, yet current laws permit favourable tax treatment towards spread betting and gambling i.e. it is not taxable âif it is not regarding as trading and your main jobâ, my preference would be to undertake such position NOT via a spread trade. However, at risk of facing tax liabilities if I went the ânon-spread betting routeâ, I donât favour that idea either. Is there any way in which speculative forex trading (cash) can be undertaken which offers similar advantages as spread-betting but not necessarily via that route?

Answer
HMRC have given you the advice you seek. That advice is spot on.

There are no special rules for forex trading (unless it is done by a company). The only question that needs asked is "are you trading": are you engaged in a trading activity? That is not a simple question to answer. In its simplest, a tourist could return from holiday and convert his dollars into pounds at a better rate. That tourist has made a gain, but that is not a trading activity. On the other hand there is a person who regularly buys and sells large quantities of foreign currency with the sole purpose of realising a gain. That person is trading. There is a raft of scenarios in between. Each will fall on its own facts.

From what you say, you are without doubt trading. You are doing this on a grand scale. You are organised, and you have a profit seeking motive. It does not matter how many jobs or trades you have. If what you do on the foreign exchange is a trade, then the profits will be taxable (and your losses will be relievable).

Tax is charged on the profits of a trade. The person liable to pay the tax is the person who is entitled to the profits. It doesn't matter whose name the account is in. It will still be you who his entitled to the profits, and liable to the tax.

A person who makes model boats and sells them at a Sunday market may be fulfilling a hobby, but is also trading. Again. although doing it for enjoyment, he is also doing it to make money. Similarly a professional golfer cannot claim that his earnings are not from a trade because golf is also his hobby.

There is no law that prevents gambling from being a trade. The law defines a trade as "every trade, manufacture, adventure or concern in the nature of trade." The courts decided that gambling did not fit that description. That makes perfect sense because if it were a trade every gambler would be able to set his losses against tax. There are more losses than winnings in the gambling world.

uk forex tax?

does anybody know if there is any tax on forex profits in the uk either on a corporation or individual, and if you ( dont take a distribution ) would there be any tax liability

Answer
I recently saw a good post on the UK taxation of Forex on a blog at GFT here is the link. http://forex.gftforex.com/public/blog/132336

I also understand that the max corporate tax in the UK is 19%. You may want to explore this route as well.

Paul

Im not new to trading im a trend follower/ band trader i mostly use technical analysis but i trade stocks. Recently a few days ago i said wth why not try forex because i was reading about Randy Mckay who turned 2000 into 70000 in just 7 months! WOW. Before i start trading for real though i want to know alot more about this business. Is babypips.com a good site to do schooling on??? Any recommended books to read?? im just 19 years old ive been trading since 9th grade.. not with real money though but i figure forex and technical analysis work in the same way so if i can make money in stocks why not curriences? plus i get waaaayyyy more leverage and profits. Seriously i wouldnt put all my money into this but its a good way to diversify. I plan to start this year trading with 4000 dollars i will put 3000 into stocks and maybe 1000 into curriences using etoro.. but this is just a plan for now i dont plan on starting till the end of this year so this gives me this year to learn as much as possible and paper trade..
or i was thinking of just opening an etoro account with 100 bucks and see what i can make happen cuz the eur/usd is seriously gonna go up its a no brainer

Answer
and watch your money vanish faster than the winter snow in spring,if it was just that easy don't you think everybody would be into Forex,these companies LOVE beginners....

Forex trading questions?

The USD/JPY is trading now at about 80.4900 so how much would it cost me to buy 3000 shares of that currency? Also how much money am i required to have to day trade Forex? Because i know you need like 20 grand to day trade stocks. I have been trading stocks now for a couple months and i have a good trading strategy down using MA stochastic and a couple other indicators but will they still be effective in forex trading? Thank You

Answer
There is no minimum to day trade Forex, except the minimum deposit set by your broker (usually $100 to $2000). There are also no restrictions on shorting.

Forex trades in terms of lots, or notional value. And how much you can buy depends on your account type and leverage. In the US, the maximum leverage is 50:1. So, if you buy 1 mini lot of USD/JPY, you would be shorting 10,000 dollars worth of Yen, and that would cost you 1/50 of that amount, which is $200 of margin. Each pip, or 0.01 movement, would gain or lose approximately $1 depending on the currency.

As another example, if you buy one mini lot of GBP/USD, you'd be buying 10,000 dollars worth of GBP, and each pip would be a movement of 0.0001, which would still gain or lose $1.

Honestly, if you're successful in the stock market, I would stay there. But it wouldn't hurt to try Forex on a free demo account. Forex is cheaper to trade, and doesn't have bear markets in the same sense as the stock market. But it's also much more volatile.

Dear Professional Forex Traders that roaming in yahoo answers :D,

I want to trade forex using fundamental analysis, which depends on High Impact Forex News (HIFN). Now, which pair should i chose on that HIFN ? buy or sell ? in which pair ?

ex : 1. There is a news that telling that USD is getting stronger. I know that stronger USD in forex news making the EUR/USD graph/candlestick get even lower, then what pair should i choose to open position sell ? is it EUR/USD ? AUD/USD ? GBP/USD ? or NZD/USD ?
then when the USD is getting stronger, i also can trade buy in USD/JPY, USD/CHF, and USD/CAD to get profit right ? :)

The question is which pair should i choose during that forex news, and which opportunity should i take ? sell or buy ? or i should open position (buy and sell) in all possible pair and opportunity like i mentioned before ?

or you can advice me for some (free) e-book about this thing ? or site ? or everything :)

Thanks before :D

Answer
You're not going to like this answer but here it is anyway. Fundamental trading in currencies is not a straightforward idea. There are a few questions to demonstrate what I mean - how do you define your risk? Do you just buy and hold and hope for the best? Are you aware of the high spread charges that occur during news releases? Do you know that banks like to sucker people into a move before shoving it the other direction so they can fill their orders? Or that the market doesn't always move in a "rational" manner on news? (i.e, drops like a rock on good news, why?)

I do make money consistently from the market with limited, responsible risk. In fact, as of right now, I have a handsome profit from today's FOMC move, but I used the charts to get me in at a good, limited risk place and not a reliance on getting the first bits of news and trying to beat the people with instant news feeds. You can dabble in this if you like but eventually you'll understand what I'm talking about. Feel free to drop by our small community if you want to learn more about trading, we'll be more than happy to help. :)

Where to sell forex related software?

For any of those of you who do not know, forex is like stock, but forex trades and sells different currencies. Please do not say clickbank because I am already a vendor there. Ebay is terribly under priced too. Any help would be appreciated.

Answer
Not Yahoo Answers. There are so many forex spammers here that users would just assume that your product is more of the same debris.

Answer
What is "zigzag currency pair"?
If you are talking about the pair that moves or fluctuates the most, it is the GBP/USD.
If you would like to know more about how you can invest in and trade the forex market, click on http://www.4xmoneytrain.com

looking for a forex trading site that supports US citizens as well as paypal money. Thanks

Answer
Not very likely. They want ACH bank transfers.

FOREX trading is a scam. Well, for 99.47% of people it is a scam. Seventy-five percent of all investors lose nearly their entire stake in just a few months. The problem is that the company sets the exchange rate, not the open market. Also, if you buy on margin (required for almost everyone) the company can force sale of your shares when a currency falls a tiny amount, thereby not letting you survive any sort of fluctuations. Stay away. You'll have better luck at the roulette wheel, which isn't saying much.

http://www.latimes.com/business/la-fi-amateur-currency-trading-20110403,0,588787.story

What significant is between asian, european, and US session in the forex market?

Some people said that the Asian session always go up and the EURO session will counter by the opposite (down)... is this theory true

Answer
In Forex, there isn't any up and down like you would have in the Dow or S&P. Currencies are traded in pairs such as the NZD/USD so if the Kiwi goes up, the dollar by definition, goes down. The dollar may go up against once currency and at the same time go down against the other. This in fact happened the other day when the Bank of Japan announced a rate hike - dollar up against the Yen but down against the Aussie.

The market is open 24 hours beginning Sunday afternoon EST until close Friday afternoon. There is a good amount of overlap of hours in each market (Tokyo, Hong Kong, Singapore, London, Europe, New York, San Francisco). There are periods when there is typically more activity than others. Much of it depends on whether any economic announcements are being made that day by one country or another. Quite often, things are a bit slow from about 8:00pm EST until around midnight. At that time, people in the eastern parts of Europe are getting up and becoming active. One currency pair may be very active during European daylight hour and slow later on and vice versa.

If you are considering trading Forex, one of the things you should do is make a table that shows the number of pips each of the majors move during each hour of the day and find the average number of pips per hour for a month. Once you have a platform, it's easy enough to do using historical data although it's time consuming but you need to be aware of when movement typically occurs.

As a trader, where is it "easiest" to become a millionaire?
At Forex trading or by trading Stocks at the market?

*What is the big difference between them both?

Answer
Forex is a "zero-sum" proposition...the only way for one Forex trader to make a profit is for another Forex trader to make a loss...

Stock trading allows for any (or even all) holders of a particular stock to make a profit, so long as the underlying company remains in business.

It is easy to become a millionaire buying (and holding) quality stocks...

Can someone become a millionaire by trading forex?

Q.

Answer
Yes someone can become a millionaire by trading forex. Its the 5-10% out there that makes the money 90% of the people losses.

It is about understanding and mastering it that makes you the top 10%.

Forex is not difficult if you understand price action and strategies to apply into play. Money management and trading psychology is the key to success.

Ezekiel

Q. I am going to invest & need your valuable suggestions.

Answer
you can check your options in this site. enables forex trading anywhere in the world where internet connection is available; offers background information for the Forex market, Guided-Tour, seminars, one-on-one training, CHAT, telephone support, as well as other assistance tools, including technical support; enables users to start trading immediately and with no software required to download you may login to your account and trade anytime, from anywhere; allows you to fund your account with your credit card, so you can start trading immediately, regardless of banking work days or hours; And If you are a frequent trader dealing in larger volumes, they offer tailor-made account to suit your exact needs (spreads, leverage ratio, mobile-phone alerts, etc.); also uses the latest highly sophisticated and advanced technologies in order to offer you up-to-the-second quotes.

one unique feature of this site is whether you are a beginner or an experienced trader, for a minimum deposit of $100 which will also form part of your initial capital, they will provide an Account Service Manager (ASM) to be your personal consultant who will serve as your mentor and trading partner, will answer all your technical questions and with whom you can talk live over the phone, email, chat or any form of communication available. your ASM will even trade along with you so that you will get to familiar yourself about how the real trade is done and give you the tips and tricks you need to know and do to achieve a profitable forex dealing.

how do i start forex trading?

Answer
How do you start forex trading? For an institution: you either get hired for a job to do that or for private traders: Well that's simple to do. You call up a forex dealer. Tell them you want to invest some money in trading foreign currencies. Send them your money. Login to your account and start trading forex!

But no. I guess you weren't really asking that were you? In addition to the mundane process of joining a forex dealer. The next task you must undertake when thinking about starting to trade forex for profit (and perhaps for a living or a side income) is to educate yourself.

Education is key for successful forex trading. You must start learning the basics about trading and to analyse the markets. Do your research: ask friends and traders what they do, what they think and what they advise you to do if you want to start trading.

But remember, the secret key in forex trading is DISCIPLINE. Without the discipline for trading plans, rules and education, you will definitely cut your chances of winning in the forex game.