Forex Trading Tax in the UK Explained

The Forex market is becoming more widespread in the UK every day. Today some platforms allow them to start with the least deposits in their account and offer higher leverage. Thus, bringing trading opportunities for everyone. While there are chances of earning lots without investing, there are high risks of losing it all. With this, there are newer questions about Forex trading UK tax.

So, if you also have such questions like is forex trading taxable in the UK?, we will clarify everything for you.

List of Top UK Brokers

Broker
Rating
Regulated
Bonus
Min. Deposit
Max. Leverage
1.
FXCC

VFSC, CySEC

100% bonus

$100

500:1

Review » Open Account » Open Account
Terms & conditions apply
Your capital is at risk.
2.
Avatrade

ASIC, CBI, BVI, FSCA, IIROC, FFAJ, JFSA, ADGM FRSA

up to 40% bonus

$100

400:1

Review » Open Account » Open Account
Terms & conditions apply
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
3.
easyMarkets

CySec, ASIC, BVI

up to 50% bonus

$100

400:1

Review » Open Account » Open Account
Terms & conditions apply
Your capital is at risk.
4.
Blackbull Markets

ASIC, VFSC

$10 000 demo

$50

500:1

Review » Open Account » Open Account
Terms & conditions apply
Risk Warning: Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and, therefore, you should not invest money you cannot afford to lose. You should make yourself aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any questions or concerns as to how a loss would affect your lifestyle.
5.
Fusion Markets

ASIC, VFSC

N/A

$100

500:1

Review » Open Account » Open Account
Terms & conditions apply
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74-89% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
6.
Vantage FX

FCA, ASIC, CIMA, SIBL

up to 50% bonus

$100

500:1

Review » Open Account » Open Account
Terms & conditions apply
Trading Forex and CFDs involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.
7.
HYCM

CySEC, FCA, CIMA, FSC, DFSA

up to 10% credit bonus

$100

500:1

8.
Deriv

VFSC, FSC, IBFC

N/A

$5

1000:1

Review » Open Account » Open Account
Terms & conditions apply
CFDs are considered complex derivatives and may not be suitable for retail clients. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The products mentioned here may be affected by changes in currency exchange rates. If you invest in these products, you may lose some or all of your investment, and the value of your investment may fluctuate. You should never invest money that you cannot afford to lose and never trade with borrowed money.
9.
Forex.com

FCA, IIROC, JFSA, NFA, CIMA, FSA, ASIC, CFTC

up to $5000 bonus

$100

50:1

Review » Open Account » Open Account
Terms & conditions apply
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Do I Pay Tax on Forex Trading in the UK?

The Forex trading UK tax depends on a few factors; the most important of those is your level in Forex trading as an individual. In the UK, Capital Gains Tax applies to all the earnings and profits you make with Forex trading, and these taxes usually imply to those who are making a significant amount from Forex trading. Additionally, if your primary source of income is Forex trading, then these taxes also apply.

Do Forex Traders Pay Tax?

As mentioned above, you must pay the Forex trading UK tax according to your trading type and your profits. Usually, there are 2 main types of Forex traders, and here are the taxes that they have to pay:

Speculator

Speculators are also like gamblers who do not have consistent earnings because of how they make their trading decisions. These traders usually rely on other sources of income, but they may have an additional or secondary income from Forex trading. Such traders do not have to pay any tax in the UK.

Investor

Investors take Forex trading seriously, and they treat ut as their business being the main option of their income. Forex traders have to pay tax on their profits according to their income. There are 2 options for paying taxes on income which are:

  • Corporation tax
  • Capital gains

The importance of the type of trading instruments making you profit

Another thing that the Forex trading UK tax depends on is the trading instrument you use. The trading instruments are classified into 2 groups: Spread betting and CFDs. Spread betting is considered gambling because of the simpler way to trade, which is why profits here are free from any tax on capital gains.

On the other hand, the CFDs are more complicated, and the profits/earnings are considered capital. Thus, those who trade CFDs in the UK have to pay capital gains tax.

Do you only pay taxes on earnings, or do you also have to pay taxes on trades?

Although different jurisdictions worldwide have different taxation rules and some charge for individual Forex trade, there are no such taxes in the UK. So, when Forex trades in the UK, you only have to pay tax on your capital gains.

How do you pay your Forex trading taxes in the UK?

As there are no individual trade taxes for Forex trading in the UK, the taxes usually are payable on the profit you make. Interestingly you do not have to pay taxes on every profit you make or every time you withdraw your earnings from Forex because that will make things complex.

So, in the UK, you must pay taxes for your capital gains through Forex trading at the end of the tax year. That too, if your profits/earnings through Forex trading are liable for taxes. Otherwise, you do not have to pay any taxes.

The top 5 Forex trading platforms in the UK

If you are looking for Forex trading opportunities in the UK, below are the top 5 platforms you can start with. You can learn more details about the best beginner Forex brokers in UK here.

1. IG

IG is the best overall Forex trading platform and the most reliable platform to begin Forex trading in the UK. Its trading instruments and services are amazing but keep in mind that the minimum deposit requirements are not very easy to meet for everyone.

2. CMC

To start with a technology backed by the latest technology, you must try CMC Markets. Here you get the top-notch quality research tools that bring you an innovative trading experience. The overall experience of this platform is amazing, with 12000 tradable instruments and market-leading features.

3. eToro

eToro is a global Forex trading platform that brings top-notch Forex trading services to the UK. Here you will find a good trading environment with many trading options. It offers 24/7 customer service, and there are 0% commission charges. However, if you need to use VPN, there will be no built-in option.

4. IC Markets

If you want an automated trading experience, then IC Markets might be a great option. It offers trading through MetaTrader and cTrader platforms. Here you also get a wide range of educational material. However, it is not regulated by FCA.

5. AvaTrade

AvaTrade does not operate a bank, and it is not an FCA-regulated platform, but it is still reliable. It is an amazing option for beginners in the Forex trading world because of the educational content. Remember that an inactivity fee of $100 will be charged on re-admission after 1 year of inactivity.

The top 4 Forex trading platforms in the UK comparison overview

Below is a quick comparison of the regulation, average spread, and minimum deposit.

Platform Minimum Deposit FCA Regulation Average Spread
IG £250.00 Yes 0.828
CMC $0 Yes 0.730
eToro $10 Yes 1.0
IC Markets $200 No 0.620
AvaTrade $100 No 0.910

Through this comparison, you can easily check which platforms will be the most reliable for your Forex trading UK tax.

Conclusion

The forex market has become extremely efficient in the past few years, and today, many beginners and experts in the UK are a part of this market. One thing common about all of them is that they have to follow the same rules to pay their taxes. So, whether you are a businessman or a professional Forex trader or trading as a leisure activity, you have to pay your Forex trading UK tax to continue growth in the Forex trading world. We hope that all of your confusion regarding Forex trading taxes in the UK has been resolved.