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Leading religious and social figures in the UK push to remove the tax exempt status of spreadbetting
After several years of tax exemption the UK Treasury seems to be aiming at that heaven. Lawmakers will look into spread betting after the taxing question was raised by the Archbishop of Canterbury and shadow treasury spokesman Lord Eatwell. It is a surprise that this “loophole” as Treasury spokesman in the House of Lords called it is finally coming under the cross-hair of tax authorities.
As The Telegraph reported yesterday the second day of debate on the Banking Reform Bill tax-free spread betting appears to be thrown under the bus as it was categorized by the Labour representative as an “extraordinary form of tax avoidance within the financial services industry”.
This might be one of the few cases where the UK will take a legislative cue from Australian laws that have started taxing spread betting gains after a clarification issued back in March 2010 that gains ware to be classified under the capital gains tax code. Under the same tax code losses from spread betting are tax deductible.
Currently financial spread betting in the UK is not regulated by the Gambling Commission, yet it is classified as gambling under the Gaming Act.
Virtually all people in the industry have been aware of this loophole, which arguably can encourage traders to achieve personal gains from having a sensitive type of information. The only real question in the eyes of the public could be “why now?” – in the aftermath of the financial crisis this could (and arguably should) have been one of the first pillars to support additional tax income for the Government.
While it will have an impact on spread betting firms in the UK such as IG and FXCM this move to crackdown on these gains is not such a big surprise considering for how long the public has been aware of this backdoor to avoid taxes on financial gains in the UK. For now however these are only intentions, so volumes at the firms are likely to remain unaffected in the short run.
Following is link to the full article by The Telegraph.