Why use a broker?

Hi all this is my first post and I'm new to forex as a whole.

My question is on why it's best to use a broker over a financial spread betting firm? All profits from betting are tax free in the uk, but as I've never used them I'm wondering if there is a reason why it's worth paying the tax?

This doesn't effect me yet as I'm on a demo account currently, but it's something I'd appreciate feedback on from UK members.

Cheers,

Pete

Hi Pete, welcome to the forums!

If you're self-employed as a full time trader and it's your main or sole source of income then it's likely to be liable to tax anyway, it's a grey area and a good accountant is a must if you want to avoid an over-inflated tax demand landing on the mat. Don't forget they can demand, we've then got to justify why we're not liable!

Depending on your level of investment (and to a degree your trading style) spread betting firms aren't always the best choice, they have minimum and maximum bet sizes and their spreads are generally wider than your average broker, plus a lot of them aren't 24/5 which would leave you exposed to the risk of overnight gaps.

There are better ways to reduce tax liability, some accountants even specialize in tax issues for traders.