How to pay tax when working for a prop firm?

[sunsi55]

Hello,

I am starting to work for a UK(London) prop firm in January. In my contract it says I will be "Self-Employed".

How do I go with paying taxes in this situation?
Does anyone have any experience in this area?

I am originally from Scandinavia, but as I have understood I am to follow the UK taxing rules.

 

[malaguti]

Hello,

I am starting to work for a UK(London) prop firm in January. In my contract it says I will be "Self-Employed".

How do I go with paying taxes in this situation?
Does anyone have any experience in this area?

I am originally from Scandinavia, but as I have understood I am to follow the UK taxing rules.

If you are self employed, you need to consider whether you will pay yourself a salary, or take money via "dividends" to yourself if you start your own limited company, or take share of profits if you deem yourself sole trader, not as limited liability
The tax will be slightly different in both cases.
Self assessment is the way in which tax is calculated, and then the wonderful HMRC will requirement payment based on this assessment. The time for self assessment is coming up in April, so consider the alternatives early would be my advice
Depending on how much you actually earn whilst working for this prop firm, will depend on how much if at all you have any tax to pay.
If you need any help then let me know

 

[sunsi55]

Thanks alot for the reply sir!

How should i determine which alternative to go for? I am interested in taking out maybe around £2-3k a month from my traiding account. I do not know if this will go under paying myself salary or dividends?
Which alternative do you recommend? How will tax differ?
And how do I go on to register as a self employe?

I highly appreciate all your help.

 

[malaguti]

Thanks alot for the reply sir!

How should i determine which alternative to go for? I am interested in taking out maybe around £2-3k a month from my traiding account. I do not know it this will go under paying myself salary or dividends?
Which alternative do you recommend? How will tax differ?
And how do I go on to register as a self employe?

I highly appreciate all your help.

You dont need to register as it were..this is covered in your self assessment.
and if you do set up a limited company then you would either be an employee of your company or you would register it as having no employees. Either way self assessment will be required salary or not, as you will be earning dividends
My best advice is to speak to an accountant as to the best method
The considerations will be how much, not just you will take out but how much your trading account is making, as this would be considered capital gains.
As a company you pay twice, both the corporation element and then as the person getting the money. But you pay much less by taking out dividends.
You will have an annual allowance under capital gains tax, the first 18k I believe is tax free for CGT. so this is where your trading account now comes under consideration..how much do you think your total trading account will be making?

One thing I might also do is contact your own scandinavian tax regulations.
I am self employed, and I also work in other countries however as I am a UK citizen I am taxed under UK laws, I would first double check any advice you were given with regard to paying UK tax OK

 

[Mr Woozel]

Hello,

I am starting to work for a UK(London) prop firm in January. In my contract it says I will be "Self-Employed".

How do I go with paying taxes in this situation?
Does anyone have any experience in this area?

I am originally from Scandinavia, but as I have understood I am to follow the UK taxing rules.

Wouldn't it be better to ask the tax office or, at the very least, the prop firm?

 

[sunsi55]

Once again, thank you

This seems a little complicated, maybe because I am totaly new to being a self employe and having a tax responsibility. But with your great help, I think I will get the heng of it soon.

I hear you refer to the "Self assessment", what is this?

When it comes to "How Much", then I know for sure I will be making very little for the rest of this tax year (until April this year) atleast, because these months are just training.
It is my first year as a prop trader, so I have no idea how much I am likely to make. So it is hard to answer that question.

As I have understood I can either register a company and pay taxes on how much my account make, and then a tax again on how much I take out as dividende.
If I do not register a limited company, what do I then do?

 

[malaguti]

Once again, thank you

This seems a little complicated, maybe because I am totaly new to being a self employe and having a tax responsibility. But with your great help, I think I will get the heng of it soon.

I hear you refer to the "Self assessment", what is this?

When it comes to "How Much", then I know for sure I will be making very little for the rest of this tax year (until April this year) atleast, because these months are just training.
It is my first year as a prop trader, so I have no idea how much I am likely to make. So it is hard to answer that question.

As I have understood I can either register a company and pay taxes on how much my account make, and then a tax again on how much I take out as dividende.
If I do not register a limited company, what do I then do?

Self assessment is the mechanism used by the UK tax authority HMRC to collect monies that is not first taxed at source (via traditional employment)
If you dont know how much you might be making, then first see how much you earn and then decide..its quite likely then you will be within the UK annual threshold..but that again is for the UK.
Something tells me that you should be considering scandinavian rules..check this out first please

 

[sunsi55]

Thanks alot for all the advices. I will be doing some more research on wheter to follow uk rules or scandinavian rules.
If not my two other alternatives is to fill in an Self Assessment on how much I have made and pay a certain % in tax, or start a limited company which has a little more complicated tax rules?
Have I understood it correctely ?

 

[malaguti]

Thanks alot for all the advices. I will be doing some more research on wheter to follow uk rules or scandinavian rules.
If not my two other alternatives is to fill in an Self Assessment on how much I have made and pay a certain % in tax, or start a limited company which has a little more complicated tax rules?
Have I understood it correctely ?

You have indeed understood correctly. I have set up a limited company, being self employed and that method has been perfect for me. I was also VAT registered as I was within that tax bracket, and registered with employees. The more things you are registered for, the more paperwork you need

 

[sunsi55]

Hehe, I understand! But then again, if you need VAT registrations and so on you are probably doing pretty good in your proffesion and then the paperwork is worth it

Then I think I will start with just the Self assasment if I am to follow UK rules (something I will find out) , and maybe set up an apointment with an acountant in a few months when I know what others at the prop firm do, and found out how much I am likely to make.
Sounds like a plan ?

 

[malaguti]

Hehe, I understand! But then again, if you need VAT registrations and so on you are probably doing pretty good in your proffesion and then the paperwork is worth it

Then I think I will start with just the Self assasment if I am to follow UK rules (something I will find out) , and maybe set up an apointment with an acountant in a few months when I know what others at the prop firm do, and found out how much I am likely to make.
Sounds like a plan ?

A good plan, and good luck

 

[sunsi55]

A good plan, and good luck

Thanks alot sir!
And thanks alot for the help!

 

[kwickwool]

Sunsi55,

Am quite familiar with the tax in the UK as been in the same boat previously and will give this information and leave the rest to you to sort out.

It is not up to the company or the HRMC although your company may offer support as a few of you in the same boat. HRMC very limited as very situation specific and just offer declaration support.

How much u make will determine how much an issue it is, how much spare cash you have and how clever you want to be. Do you want to have a salary or if you only want a dividend payment per year can reduce your tax through your company to just 10% or less.

This is all about what you are going to do going forward.
Immediately, you can either set yourself up as a sole trader for now and see how you go, how much you make and how much of an issue it becomes, or you can use a company to help you here, Contractor Accountant and Accountants for Contractors Brookson - Brookson Ltd , have used them in the past. charge a monthly fee and sort out all the accounting for you with multiple options.

But, ultimately, this is your decision and you need to make it based on your circumstances, and how much of an issue it becomes hey.

g/l with all

kwickwool

 

[Brumby]

Hello,

I am starting to work for a UK(London) prop firm in January. In my contract it says I will be "Self-Employed".

How do I go with paying taxes in this situation?
Does anyone have any experience in this area?

I am originally from Scandinavia, but as I have understood I am to follow the UK taxing rules.

It is best to seek expert advice i.e. a tax accountant. There are a whole host of issues that may come into play and you certainly want to set up the right structure upfront as it may be impossible or difficult to unwind if subsequently you realise you are in a sub optimal structure relative to your situation.

I am a retired UK trained accountant and this is the best advice I can give you.

 

[CalvinLe55]

Maverick Trading is a prop house that trains traders how to do the options only and they allow overnight on the capital. These guys tell their own traders to set up LLC's to write off a whole bunch of crap for taxes. I am not with them at all although I do know their trading is highly train for options. They're the only house I know that have told me how to pay less taxes by setting up your own LLC.

 

[scose-no-doubt]

You can be sole trader, limited company or LLP with ltd company partner

Aside from sole trader it can get very complicated sp you need to speak to an accountant. HMRC wont help. Make sure you get an IR35 review on the contract if you go ltd.

No more freebies from Teh!