Tax Planning for Forex Traders

Deciding whether you are a trading or investing in Forex will have a huge impact on your tax position. This is covered in detail with the aid of numerous examples to illustrate key points.

There are a number of tax deductions that traders and investors can deduct. Note that the rules for forex traders are very different to the rules for forex investors. We look at the principles that apply and illustrate the top deductions you can claim to reduce tax

If you trade forex from home there are lots of tax deductions available.

If you're a forex investor the matching rules determine how you determine the cost of your forex disposals for calculating your capital gain. Having a good understanding of these rules allows you to maximise timing benefits.

If you incur losses you will want to ensure they are offset as tax efficiently as possible.

Deferring CGT significantly increases your trading balance. We look at the main occasions you can defer CGT on Forex gains.

Income splitting allows you to share the forex income/gains with another person to maximise the offset of personal allowances and basic rate tax bands.

The 45% rate of income tax applies to income (including Forex profits) over �150,000. We look at the main ways you can avoid this tax rate.

If you trade personally you could be taxed at rates up to 45%, and investors can pay tax at upto 28%. A UK company could pay just 20%. We look how how UK companies can be used by forex traders and investors to reduce tax.

If you own an existing company you may consider using any surplus funds in the company to carry out a forex activity. However, there are a number of UK tax implications. We look at this in detail.

Non UK residents have a number of UK tax advantages if they are trading or investing in forex. We look when this status can be used to avoid UK tax.

If you are UK resident now but anticipating becoming non-resident in the future there are a number of steps you can use now to reduce tax.

Using offshore forex trading can still be used to reduce tax - we show you when

About The Author

The Author of "Tax Planning For Forex Traders" is Lee Hadnum FCA CTA. Lee is a rarity among tax advisers having both legal and chartered accountant qualifications. After qualifying a prize winner in the Institute of Chartered Accountants exams, he also went on to become a chartered tax adviser (CTA).

Lee is the former tax columnist at "YourTradingEdge" - a popular financial trading publication.