UK Broker options

With the prospect of capital gains tax increasing to 40% or even 50%, what are the options for choosing a broker? I was thinking of going the route of spread betting but after looking into it, it looks like the problems start when you are profitable. Any opinions?

From what I can see, the whole spread betting thing in the UK is a clever ploy by bucket shop brokers to fool punters on to their platform, safe in the knowledge you are never going to make money with them. If you do make money and trading becomes your primary source of income, you will end up paying tax regardless of whether you call it spread betting or miracle money making out of thin air (there are other people on this forum more knowledgeable about the legal issue of spread betting so don't take that as fact but I believe it's all taxable regardless.)

My advice is if you are serious about trading, set yourself up properly with a good accountant and a limited company (off shore???) and you will pay very little tax. You don't really believe any one with money in this country is really going to be paying 40 or 50% tax do you? There are a million and one ways to siphon off your income and pay less tax than someone on minimum wage. Just get a good accountant and you'll be amazed at the loopholes available to allow you to keep all your money.

Thank you for the reply flotsom, I hadn't realised there were options available to reduce the tax..

Can anyone offer further advice on this? (legally reducing tax, offshore account etc)

Wait and see what tomorrow brings.

There is currently a personal allowance as I understand it for CGT, about £10k per year. If that stays, you only need to worry about CGT if you are earning over that per anum.

My understanding is that spread betting is all tax exempt, not sure what the previous poster is getting at. Maybe he can clarify further.

I really do think that spread betting is a gimmick in much the same way it's a gimmick when brokers say "We accept robots and scalping" (of course they do).

Spread betting is only tax exempt if it is a secondary income (i.e. you're just having a gamble once in a while just like taking a punt on the horses). As soon as trading/spread betting becomes your primary source of income which presumably is the whole idea, then it becomes fully taxable. That is at least the way I understand it.

Now here is just a very basic idea for avoiding tax as much as possible. Set up as a limited company. Pay yourself a basic salary of about £6400 per year which is completely tax free. Then let the company pay corporation tax at a rate of 21% on all the rest of the profits up to £300,000 per year or 28% for everything over that. Once the company has paid the tax, you can then pay yourself a dividend of roughly £60,000 without paying additional tax because the company has already paid it. So you can effectively earn close to £70,000 per year and only pay tax at 21% as opposed to paying 20% up to the £37000 mark and 40% for everything over that if you traded as an individual. And this is just the very basic level. With allowances, expenses and a really great accountant that loves screwing the tax man at his own game, you can walk away with at least £100,000 per year with next to no tax being paid. Set your company offshore and you're laughing all the way to the bank and there's nothing anyone can do about it.

Obviously I'm not an accountant and my figures are VERY rough based on what my accountant tells me, so please don't take this as completely accurate. It's just a starting point. All you need to know is no one with half a brain in the UK is paying anywhere near the horror figures of 40% and 50% you see bandied about in the press. The more money you have, the less tax you pay. Most billionaires pay about 13% tax from what I remember. It's the middle income doctors and lawyers that pay all the tax....god blesss them!

Thanks Flotsom, some good ideas there.

Have you made full sense of the budget?

Wasn't quite sure what Osborne was talking about when he mentioned the entrepreneur tax?

Thanks for the info flotsom.

With the budget out, 28% CGT is the most we will have to pay now, so not all bad! Certainly better than 50%!!! - though the conspiracy theorist in me thinks the 50% figure was just put out there to 'soften the blow'...

i have been having a bad time with this company, very much oriented to take any pound from you and give you nothing, be careful

Does anyone have any opinions on WorldSpreads?

Thanks,
John