Spread Betting Ireland Tax Free
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Spread Betting Ireland Tax Free
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Do I Have to Pay Tax on Spread Betting?
Key Points: Do you pay tax on spread betting?
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The image of spread betting as a gambling activity is carried on through the way in which spread betting gains are taxed in the UK, and for the purposes of tax, it remains quite a useful association. Remember – spread betting isn’t really gambling insofar as you can legitimately predict the outcome with logic and reason (rather than relying solely on chance or an individual performance), but as far as the UK tax authorities are concerned it’s a straightforward wager. Tax treatment might seem like an ancillary issue, but it’s actually extremely important, and can make the difference between a profitable trade and an unprofitable one, and the favourable tax treatment of spread betting ultimately leaves more of your earnings untaxed.
Financial spread betting is only available in the UK and Ireland – no Capital Gains Tax*, no Stamp Duty, no Income Tax
Spread trading is regulated by the FCA but treated as a gambling activity for tax purposes
In other countries, such as the US and Australia, you would need to use other trading products such as CFDs or futures
To start examining the way in which spread betting is taxed, let’s look at how traditional share transactions are taxed as a basis for comparison. Bear in mind, it is possible to spread bet on the performance of individual shares where offered by your broker, thus it is plausible that you could invest in exactly the same trade in the share and spread betting markets with entirely different results.
A share transaction sees the transfer of ownership in a share, an asset. For starters, shares in the UK are liability to the payment of Stamp Duty, a form of tax that is applied on the total value of a transaction, expressed as a minimal percentage – for example, Stamp Duty for shares sat at 0.5% of transaction size. Particularly for leveraged transactions, this can be a significant tax liability to pay on each and every transaction over the threshold value. Without going too far into the intricacies of Stamp Duty and how it is calculated, this liability can be instantly removed from the equation when dealing with spread betting.
In order to realise a profit on a share transaction, you generally have to resell your shares, and this speculation with the intention to resell tends to be the core reason for most share purchases. This is where the most considerable tax burden comes into play – at the point of disposal. Capital Gains Tax is paid by UK individuals on any gains made on the disposal of capital. Effectively, CGT performs the same function as income tax on capital profits, and is charged at different rates depending on your level of capital and income. Not only is CGT expensive, but it is also highly complicated, and can be a significant administrative burden for traders, not to mention its financial impact.
In spread betting, no assets are changing hands, no transaction is taking place, no assets are being sold. It’s merely an intangible bet, or agreement between the trader and the broker, and it is taxed as a pure gambling activity – that means at a rate of 0%. The exception to the rule is where spread betting forms the core of your day to day income, at which point you will be liable to income tax on your earnings as with any other trade, business or job; in other words, you only pay tax if you run spread betting as a business. However, as a starting point this can save a substantial proportion of your profits from the hands of the taxman, leaving more cash in your pocket at the end of the day.
Assume the rate of CGT (Capital Gains Tax) is 20% and Stamp Duty is charged at 0.5%, (with all other reliefs and allowances exempted for simplicity’s sake). Buy 1000 £1 shares in Company X which you sell for £1.05 would yield a profit of £50, less 20.5%, which leaves £39.75 in profit. With a spread betting transaction on the same shares, you would be more considerably leveraged, earning a 500% return, which in turn would be tax free.
The significant savings afforded by the more preferable taxation of spread betting gains are one of the major pull factors for traders, and particularly when combined with the leverage effect of spread betting, can have a dramatic impact on the profitability of your trading activities.
Question: Are spread bets tax deductible?
Answer: Spread bet profits are tax-free and you get to keep all your profits but you can’t offset those losses against other capital gains. Let’s look at the example below.
Let’s look at the following scenario: you want to sell some equities and make a nice profit of £50,000 but at the same time you had a £50,000 investment in shares of another company which just went bust. In this case, you can offset your capital losses against capital gains, thus you have £0 net capital gain and you pay £0 in CGT.
Same scenario but this time you spread bet on shares: As financial spread betting is tax free, you can’t offset your losses against capital gains and thus you’d still have to pay Capital Gains Tax on the £50,000 profit you make from the sale of equities, even though you actually made no profit from these two transactions.
Question: Is financial spread betting really tax free?
Answer: Yes, this type of trading involves no taxes and you don’t need to report any profits or losses to the HMRC, just like with any other gambling activity.
Question: Is there any tax in the EU or Australia?
Answer: Financial spread trading is only available in the UK and Ireland, in other countries you would need to use other trading instruments such as futures or shares and these products are subject to tax.
Answer: Unfortunately, more than 70% of traders lose money and since spread bet traders can’t offset those losses against capital gains, the taxman in the UK actually benefits from this regime. Also, as spread betting falls under the gambling regime, the taxman collects more tax from your provider.
One of the key advantages of spread betting is that it is taxed accordingly to considerably more favourable rules than other forms of trading. Essentially, spread betting is regarded by UK tax law as a gambling activity, and therefore the profits from spread betting are tax free – i.e., there is no capital gains tax to pay on the earnings generated. Because spread betting is based on asset prices, rather than trading in the assets themselves, it is also exempt from stamp duty, which when added to the CGT savings makes spread betting an even more attractive investment style.
Spread betting can attract tax liability in the instance that it becomes the trader’s main source of income, at which point earnings are subjected to income tax according to the normal income tax laws. However, for the most part spread betting is a potentially highly lucrative, tax free form of trading.
Independent Investor is a news and educational portal covering latest events in the world of trading and investment. Information on this website is for informative purposes only. Between 74-89% of retail investor accounts lose money when trading CFDs, forex, and spread betting. You should consider whether you can afford to take the high risk of losing your money. Independent Investor offers an unbiased and independent broker comparison service, but we may receive compensation from the listed brokers.
10th November 2021 16th May 2022
Mark Ocampo
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Are Gambling Winnings Taxable in Ireland? Bettings were first regulated with the 1960 Betting and Gaming Act, in which a tax was imposed either on stakes or winnings in high street betting shops. This was charged at a whopping 9% for punters. It was abolished by Gordon Brown in his March budget of 2001. Let’s find out – Are Gambling Winnings Taxable in Ireland?
This taxon gambler was replaced with a 15% tax on bookmakers and their total profits at the point of supply instead. This meant that if a bookmaker wasn’t based in the UK. This was a deep concern for Brown, who feared that the UK was losing revenue to offshore gambling sites.
In fact, more and more bookmakers shifted from online operations offshore where they would only have to pay the local tax rate on profits—this was capped at 1% in Gibraltar!
This all changed with an amendment to the 2005 Gambling Act in 2014. Now the tax was changed to 15% on all gross profits at the point of consumption including offshore businesses. This now made gambling operators in Gibraltar and the Isle of Man pay tax in order to obtain a gambling license. This amendment essentially made it illegal to operate in the UK without a UK gambling license.
This had a great impact in making UK-based bookies and betting shops more competitive—enhancing the growth and success of the gambling industry in the UK.
There is a huge difference in taxation in terms of trading and recreational gambling. Let’s discuss if your gambling rewards are taxable in Ireland.
It’s a given that your winnings from lotteries and sports betting are not subject to Ireland’s capital gains tax. It’s good news for gambling aficionados and casino enthusiasts. While most gambling game winnings aren’t taxable, it’s important to note that the income tax approach is not crystal clear when a punter is regarded as a trader or a simple recreational gambler. So how would you know if you are assuming a trader role or just a recreational gambler?
Investing in gambling is a very subjective notion. It’s a given that gambling depends on pure luck and it doesn’t require any skills to win. There is no really a rational prospect of gaining profit from gambling activity, hence, it can’t be considered as a trade per se. The ironic topic would be betting is systematic and organized in such a way that the profits are the reward of the bettor’s wager options. The proceeds are deemed as income from a taxable trade. Are you confused already? Could you get an answer – Are Gambling Winnings Taxable in Ireland?
It’s a conflict that the gambling industry is debating. There’s no objective method to determine if a gambling activity is a trade per se. The Ireland Revenue Commissioners are reviewing every case based on actual facts and situations. The objective approach would only be seen if a person is regularly engaging in gambling activities. This person isn’t a recreation gambler since he is wagering to create profit from a wagered amount of money. It’s considered a trader’s approach. This would have answered – Are Gambling Winnings Taxable in Ireland?
According to Galway Independent, these are the factors to consider if a person is a trader:
Bettors in the United States who are fortunate to win a big among of more than $5,000 in a lottery will be subjected to 30% withholding tax. For instance, if you win a whopping $100,000 jackpot, you only receive a net total of $70,000.
The Internal Revenue Service will claim the $30,000 to settle your tax liability. Good news for table games enthusiasts, your winnings on roulette, blackjack, and baccarat aren’t taxable. Gambling losses up to the total amount of winning can be offset for tax purposes as well.
So, could you get an answer to – Are Gambling Winnings Taxable in Ireland?
Gambling activities in Ireland aren’t all subjective to income tax. Recreational gamblers won’t feel the effects of gambling taxation. The idea though is that it is still subjective whether a person is a trader or a recreational gambler.
For instance, a trader can wager $1,000 daily per week and a recreational gambler will wager $7,000 per week; it’s the same amount but the frequency is different but the objective is the same which is to gain profit. Right? Still, confused? Let the Irish gambling regulators take care of this issue and enjoy the games. Hope you would get your answer to – Are Gambling Winnings Taxable in Ireland?
If you’ve gambled online, you’ve noticed that the industry continues to grow. Whether you are talking about the quality of the games, technological aspects like mobile betting, or regulatory and tax issues. Many of the sites that run in the UK are based offshore. Some of these offshore companies were initially based in Britain, but quickly realised they could reduce their tax burden by locating their servers elsewhere and functioning in a tax-free jurisdiction. Could you find – Are Gambling Winnings Taxable in Ireland ?
In order to stop these moves, the UK Gambling Commission now requires all sites that welcome British customers to be fully licensed, whether they are physically based in Britain or elsewhere. Apart from this, these sites must also pay the same 15% tax as their British counterparts. Of course, as a gambler you won’t have to deal with these taxes. Nevertheless, a level playing field reduces the odds of the government making changes that adversely impact bettors.
No – revenue and customs do not make a distinction between casual and professional players . Even if this may be subject to change in the future, at the present time gambling isn’t a recognised trade.
If you are a professional poker player , chances are you’ve already consulted with an accountant. Even so, there are a couple of points to consider. If you play outside of Britain, you may have to deal with local taxes. For example, if you win money in Las Vegas you could be subject to a federal withholding tax, although you can often apply for a refund as a non-resident. Also, if you become a poker celebrity and get paid for public appearances or representing an online cardroom, you could be subject to taxes but not on your winnings.
No. Your gambling winnings aren’t taxable, especially in the UK. Here you won’t have to pay taxes on any of your winnings or stakes. It doesn’t matter if you’ve won £100 or £1 million. This is applicable to all types of gambling—from slots , bingo, lotteries , and even horse racing. So if you win big, you can rest assured knowing that you can spend your money in whatever way you’d like.
as per the site you’re using, your winnings will either be paid to you in one lump sum or as a certain amount each month. If you’ve won recently, or you frequent a particular site, casino, or betting brand, you should check their Terms and Conditions. This will clear everything you need to know should your lucky day come. Is it clear – Are Gambling Winnings Taxable in Ireland?
If you are not a resident of the UK, your winnings might be subject to a tax, so it’s important that you check in advance. For example:
If you’re a UK resident and you gamble abroad, you usually won’t need to worry about taxes. Most countries have alliances with the UK, so you won’t be subject to their tax requirements.
No! The good news for gamblers in the UK and Ireland is that they are exempt from paying any tax on their winnings. Since back in 2001, betting duty has been abolished on UK shores which also applies in the Republic of Ireland, which means that winnings earned from sports betting, online casinos, bingo, poker games, or lotteries are exempt from taxation.
This list is not exhaustive, but this is a selection of some of the popular countries where gambling winnings are not taxed. Other countries, such as India, have different laws across their various states.
The same rule applies to professional gamblers who place a £1 bet on the horses on a Saturday: gambling winnings are exempt from taxation in the UK irrespective of the volume of wagers placed. It’s noticeable that a tax refund on losses can’t be sought by those who are self-assessed.
For countries outside of the UK, professional gamblers will be subject to the tax laws of that particular jurisdiction. UK poker players who head to Las Vegas to play are still subject to the gambling laws in their home country, although 30% of their winnings are withheld unless a W2-G form is completed.
Yes, from the introduction of the Point of Consumption Tax , online gambling sites – no matter where they are based – are obliged to pay 15% on all wagers accepted by UK players.
Any activity that falls within the definition of gambling under the jurisdictions’ legal framework is subject to the same level of taxation, whether that’s a casino gaming and sports betting or bingo and poker.
No, since the betting duty was abolished in 2001, you do not have to declare winnings to HMRC in the UK or Ireland. In Ireland, gambling winnings must be declared under the terms of the US Tax Code, and other countries have similar rules.
Gambling winnings are subject to inheritance tax if you should pass on within seven years of the gifting. Gifts of no more than £250 can you give freely.
We hope that this article was helpful in your understanding of the gambling situation in Ireland.
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