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Are Forex Gains Taxable UK?

Do US based Forex Traders have to pay taxes on income derived from the trading of FX from within the UK?

As you can guess, the question is not as straightforward as it may seem. Given that the majority of forex traders lose money, it is not in HMRC’s best interests to enable all dealers to credit their losses against other income.

As a consequence, various trading instruments have unique regulations. And it’s all contingent upon your profitability.

There are four distinct kinds of taxation that affect forex traders:

Stamp Duty Tax – a tax or duty levied on the purchase of shares.

Capital Gains Tax – tax on gains earned from the sale of assets

Income Tax – the amount of tax you pay on your total earnings.

Corporation Tax – tax on the profits of a limited liability business.

The information below is intended for individual traders and those who trade in addition to their full-time jobs.

Trading is a sideline business

If forex trading is a side hustle, the Trading Allowance protects you. It enables you to earn an additional £1000 tax-free. Profits above £1000 will be taxed at the normal 2021/22 income tax rates.

*You should seek professional advice on such matters

My primary source of income is trading

As a self-employed investor working full-time, you will be taxed on any earnings above the tax-free Personal Allowance.

By 5th October 2021, you must register as self-employed by reporting your income to HMRC. Following that, you will submit a tax return to pay the tax you owe.

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