Forex Trading Tax UK 2026 — CGT, Spread Bets, Section 104 Pool

Spread betting — tax-free: HMRC classifies financial spread betting as gambling. Profits from spread bet account are not subject to Income Tax, Capital Gains Tax, or any other UK personal tax. Losses are also not deductible. Available only at FCA-regulated UK spread betting providers.

CFD trading — Capital Gains Tax: CFD positions are derivatives subject to CGT. Annual exempt amount (£6,000 for 2024-25, may change) shelters small profits. Above the exempt amount, basic rate taxpayers pay 10% CGT; higher/additional rate pay 20%. Losses can offset gains in the same or future tax years.

Professional trading — Income Tax: if HMRC classifies your trading activity as a trade or profession (frequency, sophistication, primary income source), profits are subject to Income Tax (20-45% marginal rate) plus Class 4 NI (9% above threshold). This classification is generally unfavourable to retail traders; HMRC's threshold is high but the assessment is fact-specific.

Section 104 pooling rule: when you buy and sell the same underlying instrument multiple times, your CGT calculation uses pooled cost basis rather than tracking individual lots. All purchases of an instrument go into one 'Section 104 pool' at average cost; sales use this average cost.

For forex CFD trading where positions are typically same-day opened and closed, Section 104 pool concerns are minimal. For long-duration positions across multiple tax years, Section 104 pooling affects cost basis calculations.

Same-day rule + 30-day rule (matching): purchases and sales within the same day match first; purchases within 30 days after sale match next (bed-and-breakfasting prevention). Then Section 104 pool. For frequent forex traders, this can complicate manual tax calculation; broker statements with end-of-year P&L summaries simplify reporting.

Self Assessment: UK forex trading profits report via Self Assessment tax return (SA100 main form + SA108 for capital gains). Deadline 31 January following the tax year ending 5 April.

Broker statements: UK-regulated brokers (IG, CMC Markets, Saxo UK) provide end-of-year tax summary statements aggregating gains/losses by tax year. Use these as primary documentation. Offshore brokers may not provide UK-format statements; manual aggregation required.

Spread bet vs CFD account: same broker may offer both account types. Spread bet account profits don't appear on tax return (tax-free); CFD account profits/losses appear on SA108. Many UK retail traders use spread bet accounts specifically for tax efficiency.

Record keeping: HMRC requires retention of trading records for at least 5 years after the tax year. Broker statements, trade history exports, and personal records of trades should be archived systematically.