Are CFD Profits Taxable?

This is a good question, though it’s also one that doesn’t have a straightforward answer as an individuals or corporates tax status will vary, based on factors such as the jurisdictions they trade from and or are taxed in.

Please note that Blackwell Global are not tax advisers and clients should seek specialist advice if they have concerns or questions on this subject.

It’s certainly true to say that in the United Kingdom and under UK tax law, profits that are made through CFD trading, by individuals (who are taxed in the UK) and which are in excess of an individual’s annual capital gains tax allowances, would be subject to UK taxation.

In the tax year 2016 – 2017 the annual individual capital gains tax allowance is £11,100.00.

Of course the flip-side to this coin is that losses incurred through CFD trading could potentially be offset against capital gains that are made elsewhere.

In any event before we need to worry too much about tax liabilities we need to think about we are going to make consistent and regular profits from our trading. If we can go on to achieve this and have a glass half full outlook. Then we probably shouldn’t mind too much if we have pay a bit of tax on our winnings.

CFDs offer many benefits to traders

There are numerous other benefits to CFD trading however, which include the ability to trade long (buy) or short (sell) with equal ease. Regardless of whether you own the underlying instruments or not.

CFDs are settled for cash, so there is no need for traders to concern themselves with taking or making delivery of the underlying instruments. Nor do traders have to consider delivery or expiry dates, as our CFD contracts are priced on a rolling spot basis and as such never expire.

There is just one quote to focus on per instrument – rather than the specific prices for monthly or quarterly contract dates associated with futures style trading.

Wide range of CFD contracts

Blackwell Global offers its customer access to a wide range of Equity and Commodity based CFDs. Our Equity Index CFDs allow clients to take a view on Equity markets from around the globe. Providing opportunities for asset allocation and portfolio diversification, as and when trends arise in the marketplace. Our contracts on Oil and Precious Metals provide our clients with the ability to trade some of world’s most important commodities, full details of the contracts we offer can be found here CFDs.

Leveraged products

CFDs are traded on a leveraged basis. Which means that traders can control larger positions in the market, than their accounts would otherwise allow. In effect their broker gears up or leverages a client’s deposit. Thereby lending them money and charging them a rate of interest for doing so, if the clients hold open positions overnight. The ability to leverage or gear your exposure can magnify your trading profits. But be aware that leverage can also do exactly the same for trading losses.

Understanding  leverage

Traders should always respect their use of leverage and should familiarise themselves with its operation in a Demo Account environment, before engaging in live trading. The good news is that this is a really simple thing to do. You just need to complete this short form Demo trading account and click on the Open My Demo Account button. Then simply download your trading platform (see download) and login to gain access to a highly realistic simulation of the live market. Which you can trade on without any risk to your own capital. Until such time as you are ready to trade the real thing. In this way you can familiarise yourself with leverage and other aspects of CFD trading.

One trading platform multiple devices

Today’s online CFD trader wants to be able to deal from a variety of locations across multiple devices. Blackwell Trader MT4 offers you just that functionality. Our state of the art trading software can be downloaded for both desktop PCs as well as Android and iOS mobile devices. Your individual account  logins will work on all versions and traders can deal seamlessly and transition from one device to another as required.

Blackwell Global Trader MT4 comes complete with a built in high, quality charting package that’s loaded with indicators and studies.So that traders like you can hit the ground running. Tracking CFD prices and charts couldn’t be more straightforward and trading is just a click or two away.

Tracking performance and profitability

Blackwell Global also offers its clients a dedicated back office system, Infinitum. That allows them to monitor and track their trading activity and account balances. Blackwell Global clients receive daily trade confirmations on each day they deal. These show the opening and closing prices of individual trades, open positions and the profit and loss accruing from them. It’s always worth taking the time to check these confirmations and making sure they match your records. Clients also receive monthly statements that contain details of all the trades they have made in the preceding period, as well as their monthly cumulative P&L,inclusive of any charges.

These documents provide an invaluable record of your profitability and can be very useful when you are tallying your overall year end performance for tax purposes. Note as well that Blackwell Trader MT4 provides users with live P&L, deposit and margin requirement information on both demo and live accounts, via its built in terminal functions.

To find out more about CFD trading with Blackwell Global why not register for and download our free CFD starter kit here.