Absolute noob question time!

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lavelle
Posts: 2
Joined: Mon Sep 03, 2018 11:31 am

Hopefully this is super simple for anyone here who knows what they're on about lol. I am self employed, and was wondering if anyone else here is too and could answer a quick question - do I need to declare betting income/put taxes on it? I've only just started playing with Betfair and it's quite the learning curve, but I'm enjoying it so far, especially with advice from here! (been lurking for some time). I normally put everything into this tax calculator to know what tax I'll be putting down - do I need to add profit from bets to this or no?

Thanks! :)
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Dallas
Posts: 22674
Joined: Sun Aug 09, 2015 10:57 pm
Location: Working From Home

This should help
viewtopic.php?f=2&t=10887
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SeaHorseRacing
Posts: 2893
Joined: Fri May 20, 2016 7:06 pm

Save you the hassle. Trading on sports exchanges is completely tax free. Your very welcome :D
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ShaunWhite
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Joined: Sat Sep 03, 2016 3:42 am

It's a 2 edged sword lavelle, it's not taxable but as it's also not considered as income should you ever require credit, eg a mortage, car loan etc. Even car insurance or renting property can be affected as you are 'unemployed'. I find the best approach is to say you're of 'independant means' but not everyone will swallow that unless you can also show a significant wedge in the bank.

You're also not entitled to claim Child Tax Credits or Working Tax Credits should your income fall below the threshold. You should also make sure you continue to pay class 2(?) NI contributions otherwise you'll end up without a pension.

The big earners won't be affected much but for the majority who are 'just about managing', being off-grid as far as the tax system is concerned can have it's drawbacks. There's an arguement to be made for creating a legitimate accounting entity (ie a dummy sole-trader business) and paying yourself a modest income just below the tax threshold. Anything cash-in-hand like gardening or window cleaning works well and has some allowances against tax too without drawing too much attention to yourself. It won't get you a mortgage but it does remove some of the minor inconveniences of otherwise being 'unemployed'.
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BetScalper
Posts: 1139
Joined: Sun Jul 02, 2017 10:47 pm

I could be completely wrong but I am sure I read something on a tax forum which stated the following:

- if your only income is from gambling/trading and you are classed as doing this full-time then any income is classed as taxable over the threshold.

Like I said, I might have misinterpreted what exactly the tax implications were.
LinusP
Posts: 1871
Joined: Mon Jul 02, 2012 10:45 pm

BetScalper wrote:
Mon Sep 03, 2018 5:51 pm
I could be completely wrong but I am sure I read something on a tax forum which stated the following:

- if your only income is from gambling/trading and you are classed as doing this full-time then any income is classed as taxable over the threshold.

Like I said, I might have misinterpreted what exactly the tax implications were.
As far as I am aware there has yet to be an example of this occurring, I believe the HMRC have bigger fish to fry.
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BetScalper
Posts: 1139
Joined: Sun Jul 02, 2017 10:47 pm

LinusP wrote:
Mon Sep 03, 2018 6:25 pm
BetScalper wrote:
Mon Sep 03, 2018 5:51 pm
I could be completely wrong but I am sure I read something on a tax forum which stated the following:

- if your only income is from gambling/trading and you are classed as doing this full-time then any income is classed as taxable over the threshold.

Like I said, I might have misinterpreted what exactly the tax implications were.
As far as I am aware there has yet to be an example of this occurring, I believe the HMRC have bigger fish to fry.
Maybe but didn't HMRC screw window cleaners a few years ago ?
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jimibt
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Joined: Mon Nov 30, 2015 6:42 pm
Location: Narnia

BetScalper wrote:
Mon Sep 03, 2018 6:29 pm
LinusP wrote:
Mon Sep 03, 2018 6:25 pm
BetScalper wrote:
Mon Sep 03, 2018 5:51 pm
I could be completely wrong but I am sure I read something on a tax forum which stated the following:

- if your only income is from gambling/trading and you are classed as doing this full-time then any income is classed as taxable over the threshold.

Like I said, I might have misinterpreted what exactly the tax implications were.
As far as I am aware there has yet to be an example of this occurring, I believe the HMRC have bigger fish to fry.
Maybe but didn't HMRC screw window cleaners a few years ago ?
mark - i think the difference here is that window cleaning (using your example) is a service and is charged at a given rate. the expenditure is basically the cleaning materials and your time (of which all tools and materials can be offset against the profits). cut to gambling/trading. in trading/gambling, those expense offsets are far more comlicated. You'd be loking almost at a tax refund for the majority of folk that do this. then take into consideration the saturday punters that have the odd big win and plenty of losers. they would then try and offset those losses against their tax thresholds, thereby removing money from the tax system.

i think i kinda understand the motives for keeping this area of indusrty outside of the common tax system.
LinusP
Posts: 1871
Joined: Mon Jul 02, 2012 10:45 pm

If they treat gambling like wages and losses could be offset then they would actually lose money due to the spread / commission.
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Kafkaesque
Posts: 886
Joined: Fri Oct 06, 2017 10:20 am

FWIW here in Denmark, winnings from trading/betting from companies with a license in the EU are tax-free, with non-EU then, obviously, being taxable. Is it really tax-free from anywhere in the UK? Or are you guys assuming so, because you almost exclusively use Betfair?

There's every chance that it's different from here and is in fact tax-free regardless of EU status of the companies. Well worth knowing, I'd say though, given the change, we all know is creeping ever closer for you.
foxwood
Posts: 390
Joined: Mon Jul 23, 2012 2:54 pm

BetScalper wrote:
Mon Sep 03, 2018 5:51 pm
I could be completely wrong but I am sure I read something on a tax forum which stated the following:

- if your only income is from gambling/trading and you are classed as doing this full-time then any income is classed as taxable over the threshold.

Like I said, I might have misinterpreted what exactly the tax implications were.
You are ;) - it was decided 93 years ago and is in HMRC manuals https://www.gov.uk/hmrc-internal-manual ... l/bim22017

Original appeal case https://library.croneri.co.uk/cch_uk/btc/9-tc-309
spreadbetting
Posts: 3140
Joined: Sun Jan 31, 2010 8:06 pm

That case was based on him backing with bookies at starting prices I'm sure HMRC could make a case for Betfair trading as a taxable incoe if they so wished.
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BetScalper
Posts: 1139
Joined: Sun Jul 02, 2017 10:47 pm

I don't doubt the replies. Must have got it wrong I guess. However, slightly different but I do know a self-employed forex trader, which is gambling in another form and his tax bill is HUGE. :o

The article I read was referring to HMRC concluding that if your only income was from gambling and that you were classed as doing this full-time etc. It would take your income - losses and if this was greater than the tax allowance then you would be liable to the standard rate of tax on the difference, like any other self-employed person etc. Again, the onus being on you to file your return regardless of how you earned the money.

I will conclude I must of misunderstood the tax advisers advice and go with the expert flow on here. :)
lavelle
Posts: 2
Joined: Mon Sep 03, 2018 11:31 am

lavelle wrote:
Mon Sep 03, 2018 11:43 am
do I need to declare betting income and/or put taxes on it? I've only just started playing with Betfair and it's quite the learning curve, but I'm enjoying it so far, especially with advice from here! I normally put everything into this tax calculator to know what tax I'll be putting down - do I need to add profit from bets to this or no?
ShaunWhite wrote:
Mon Sep 03, 2018 4:25 pm
It's a 2 edged sword lavelle, it's not taxable but as it's also not considered as income should you ever require credit, eg a mortage, car loan etc. Even car insurance or renting property can be affected as you are 'unemployed'. I find the best approach is to say you're of 'independant means' but not everyone will swallow that unless you can also show a significant wedge in the bank.

You're also not entitled to claim Child Tax Credits or Working Tax Credits should your income fall below the threshold. You should also make sure you continue to pay class 2(?) NI contributions otherwise you'll end up without a pension.

The big earners won't be affected much but for the majority who are 'just about managing', being off-grid as far as the tax system is concerned can have it's drawbacks. There's an arguement to be made for creating a legitimate accounting entity (ie a dummy sole-trader business) and paying yourself a modest income just below the tax threshold. Anything cash-in-hand like gardening or window cleaning works well and has some allowances against tax too without drawing too much attention to yourself. It won't get you a mortgage but it does remove some of the minor inconveniences of otherwise being 'unemployed'.
My self employed work is unrelated to betting - I'm somewhat akin to a handyman, but for IT. It's definitely interesting getting a better understanding how the tax system works for this industry as it's so different to literally every other one - my question is more like I already have self employed income outside of betting, do I need to put profit from betting on top of that income, and will it be taxable or not.
LinusP wrote:
Mon Sep 03, 2018 6:47 pm
If they treat gambling like wages and losses could be offset then they would actually lose money due to the spread / commission.
I've seen this come up a few times and was always confused how that would actually work in practice - could anyone simplify this for me? :roll:
BetScalper wrote:
Mon Sep 03, 2018 8:25 pm
I don't doubt the replies. Must have got it wrong I guess. However, slightly different but I do know a self-employed forex trader, which is gambling in another form and his tax bill is HUGE. :o
As far as I know there are different areas of stock trading that are and aren't taxable (can't remember which are which - perhaps someone here knows & can clarify?). I know I'll never be able to get my head around that one so I haven't tried to! :lol:

Thanks for the replies all, but I'm still a little confused- most answers have answered assuming my self employed income is betting-related which it isn't, which is where my question comes from. I would have two incomes, one from the job and the other from betting (whether it's actually profitable or not we'll come to find out! ;) ). I know now that there aren't any taxes on betting income minus some interesting caveats, so how would I declare the income - just adding it on top of my current tax forms and not deducting tax, or not adding it to that at all?

Cheers! :)
foxwood
Posts: 390
Joined: Mon Jul 23, 2012 2:54 pm

As everyone says, It's not declarable or taxable nor are losses allowable - the Internet is always right ;)

If you are still in doubt or need a proper explanation why not ask your accountant (you do have one I presume since you are self employed). If he gets it wrong you can then sue him and he will be covered by his professional indemnity insurance :lol:
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