Can losses from crypto futures & CFD trading be offset against PAYE income?

T

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Hi all,

I’m a PAYE employee and in the last tax year I traded crypto futures and CFDs intraday basis (multiple trades daily). I made significant losses and am now preparing my return.

I want to know if Revenue would accept this as a trade (so losses can be offset against PAYE income) or if they would only treat it as capital losses (usable only against future gains).

Has anyone here had Revenue accept CFD/crypto activity as trading for individuals? And in practice, is it better to hire a Tax Adviser for this or try filing it myself first?

Any experiences or insights would be greatly appreciated.

Thanks.
 
Revenue may accept it as trading if you can show that it was part of your job or business, i.e. your main or sole source of income.

Since you are a PAYE employee this is unlikely.
 
It is next to impossible to get the Revenue to accept that someone with a regular employment is also carrying on a trade of dealing in financial instruments or securities; Revenue are strongly disposed to treat this as an investment activity, not a trade.

The judgment (between trade/investment activity) is usually made by looking a number of factors, call the "badges of trade". If your dealings in financial instruments to be treated as the carrying on of a trade, you'll need to make a very strong submission to the Revenue that analyses your activity in the light of the badges, and argues that by reference to those criteria it should be treated as a trade. I wouldn't consider doing this without the support of an experienced tax consultant who has advised that there is a prospect of success and can frame the submission in the best possible way.
 
@TomEdison has summed things up nicely there regarding the technical side of things, but from a purely pragmatic / practical perspective, you need to ask yourself why you would want to have this treated as a trade.

Surely the reason you're doing it in the first place is to make money; if so, your aspiration in the medium- to long-term is to strike it rich, and benefit from compounding your returns etc...

It seems extremely short-sighted to look for an income tax treatment to recoup some of your initial losses, when the effect of that (if things go the way you plan in the longer term) would be that you are locked in to pay 20% more tax on the millions that you're planning on making...

Unless of course, having got your fingers burned you've already given up on the dream and stopped the activity - in which case you may forget about retrospectively claiming trading treatment. Whatever hope you'd have of arguing that your currently ongoing activity is a trade, looking to have a short-lived, loss-making flurry of crypto futures / CFD trades, treated as a bona fide trade, will go down like a lead balloon.
 
Thanks for the detailed advice. I completely agree with your point about the long-term tax implications. It's a great perspective on why treating this as a trade might be short-sighted.

However, I've actually decided to stop trading these CFDs and crypto futures. So, my goal now is to simply try and recoup my initial losses by offsetting them against my income tax. I'm no longer aiming for doing it in future. I'm just trying to get back what I can.
 
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