Tax Setup Question for F/T traders

[splasher]

A question for the traders using predominantly futures or CFDS.
Have you set yourselves up as registered companies for tax or are you trading as yourself and paying tax that way.

Question is for two reasons:
Firstly i used to conduct all business via spreadbets so had no concerns over tax but now trade 80% of my business via futures and thus have a tax liability

Secondly i am becoming increasingly aware that as i gave up work to pursue trading a year ago i seem to have disappeared as far as credit checks, mortgages etc are concerned. So i am assuming it will be easier to form a company for trading and be a director of that company so i don't have to explain what a futures trader is to every tele monkey i ever have to speak to

TWalker and BBB inparticular i'm sure you and colleagues have it sussed out........


Splash

 

[Robertral]

A question for the traders using predominantly futures or CFDS.
Have you set yourselves up as registered companies for tax or are you trading as yourself and paying tax that way.

Question is for two reasons:
Firstly i used to conduct all business via spreadbets so had no concerns over tax but now trade 80% of my business via futures and thus have a tax liability

Secondly i am becoming increasingly aware that as i gave up work to pursue trading a year ago i seem to have disappeared as far as credit checks, mortgages etc are concerned. So i am assuming it will be easier to form a company for trading and be a director of that company so i don't have to explain what a futures trader is to every tele monkey i ever have to speak to

TWalker and BBB inparticular i'm sure you and colleagues have it sussed out........


Splash

offshore accounts

 

[frugi]

I think everyone has their own method according to circumstances and the attitude of their tax office.

I know what you mean about the profession being largely unrecognised. Even the Inland Revenue is not sure how to tax traders.

Some pay capital gains tax only, some pay income tax and NI as sole traders and others set up limited companies.

As far as the "telemonkeys" are concerned, some companies' systems recognise "futures trader" while the closest others get is "stockbroker", which is my occupation on several documents! Insurance companies assure me this is close enough and will not compromise a claim.

Here is a LIFFE document on taxation
http://www.liffe.com/products/equities/publications/taxation-equities.pdf
Here is an accountant who specialises in these matters
http://www.trioacc.co.uk/taxconsult/taxtraders.html
Here is a related thread or two
http://www.trade2win.com/boards/showthread.php?t=7537&highlight=taxation
http://www.trade2win.com/boards/showthread.php?t=5008&highlight=tax+poll
and a poll on which people were understandably reluctant to vote
http://www.trade2win.com/boards/showthread.php?t=7635&highlight=tax+poll

 

[breadman]

robertral

Robertral

evening
any chance u could go into a bit more depth on running off shore accounts.
just keep to the advantages of been off shore in comparison to running LTD business in the UK.
i understand if u don't want to talk about ur own set up, this is something thats interest me in the past, but i have never gone past a google search on it.
cheers.

 

[brys]

Very interesting topic. Doing some research in this matter myself. I'm going to share any relevant findings when they become available.

cheers,

Robert.

 

[sidinuk]

Setting up a Ltd company could be difficult as the company might be argued by the Inland Revenue as being a close investment-holding company (CIC), ie a company setup to avoid tax on investments. A CIC is not taxed at the highest rate of corp tax only.

Secondly, even if the company wasn't classed as a CIC, a limited company holds less appeal now since Gorden Brown closed his own incentive for tax free earning on the first 10k of profit.

 

[splasher]

Robertral, Offshore accounts is fine if i want to bring back my cash in a suitcase and spend the next 7 years looking over my shoulder but i am interested in the legitimate way other traders do it.

Don't see a problem with Ltd Co as it could have other activities with financial trading being the way the bulk of the money is earnt

Frugi, thanks for the sites

 

[splasher]

After conversation last night it appears that not much benefit in running Ltd Co and trading as that company, might be better to just be me trading as XYZ and then treating all profits as income.

Any views from fulltimers out there?

PS Sad i know doing this on a Sat morning but my son has had me up since 04.00 and any escape is welcome.............

 

[CityTrader]

Secondly i am becoming increasingly aware that as i gave up work to pursue trading a year ago i seem to have disappeared as far as credit checks, mortgages etc are concerned. So i am assuming it will be easier to form a company for trading and be a director of that company so i don't have to explain what a futures trader is to every tele monkey i ever have to speak to

I left The City, 18 months ago, to trade for myself ( via Spreadbets with e occasional CFD) - so effectively I have vanished from most systems for credit checks etc, etc. My mortgage broker has told me mortgages aren't a problem- more and more people are self-certified now, and having only this week applied for 2 credit cards- I have been approved for both - with a combined credit limit of £30,000 - both Credit card companies (obviously!) taking my word for it, as to what I earn....

 

[CityTrader]

IHere is an accountant who specialises in these matters
http://www.trioacc.co.uk/taxconsult/taxtraders.html

Has anyone actually used these guys? I am reluctant tp spend any time and money with them, purely on the ( probably over simplistic) view that if they were any good, they'd be in The West End or The City, not Plotzville ( apologies to those of you who live in Plotzville....) It has to be fact that most Traders are based around London, therefore the base for an support industry to traders ( such as accountant's etc) would be London....

 

[sidinuk]

Splasher, your income from trading will be treated as Capital Gains for tax purposes. The only allowable expenses will be capital loses, commission and stamp duty (if applicable).

 

[dc2000]

Slasher unfortunatly trading provides very little allowable expenses, you can however set up an investment company who's activities can include trading, long term share purchase and property purchase. This way it can reduce your tax liability.

Tip when you come to retire move to sunnier climb ie New Zealand and sell said property after a year .


Yes the credit check thing is a pain, usually sending a photocopy of a bank statement will do the trick, this will also have the added effect of giving the people you deal with manners "please" "thankyou" "welcome". For a mortgage 25% deposit will get you one with no questions

 

[frugi]

CityTrader I imagine most people who make a living from trading will find the annual return a relative doddle and will have no need of an accountant?

However it would be interesting if one could discover from an accountant who specialises in this area what percentage of their clients pay income tax/NI and what percentage pay capital gains on their profits, as the classification of trading as a business is an extremely murky area. I find this odd as it would clearly benefit the Revenue to tax us all as self employed (lower allowances, NI etc.). I still await a reply regarding my situation, having written to them 3 months ago, so will send in CGT return as usual (if necessary of course unless they tell me otherwise

Obviously if one has other forms of income other than from trading then CGT is by far the most likely method Gordon will use to relieve us of a portion of profits, but for those who exclusively derive their income from trading it seems anything goes!

 

[CityTrader]

CityTrader I imagine most people who make a living from trading will find the annual return a relative doddle and will have no need of an accountant?

Ah, but this is why I work, and make money- so I can pay people to do my crappy jobs for me.. like my accountant. it's really not something I can be bothered with- bit like gardening, my house cleaning, my car valet, etc, etc - it's there, it's probably easy to do, but can i be arsed to do it? no....

 

[frugi]

Fair enough CT I know where you're coming from! I just can't bear to pay someone 400 odd quid to do something that would take me two hours work, but then again I'm only a little fish so 400 notes is a substantial amount that I'd be wise to save, if possible. A penny saved and all that. Tis the same reason I buy cat food in slabs of 4 million tins etc.

I work for the pleasure of working, the money just lets me keep tabs on how poorly I'm doing

 

[CityTrader]

It's funny, I have no problems paying my accountant his fee's. yet can I justify paying BUPA £300 for a well man medical? no... ridiculous really... but maybe that's just me?!!

and FWIW, the way the market has treated me this financial year, I'll probably be doing other peoples' gardens shortly!!!

 

[frugi]

LOL I just went for the BUPA liver test and let the balance go toward my gym membership (all four minutes of it
Fortunately I have so far failed to damage the unfortunate organ despite a zealous level of consumption.

If it all goes wrong for us I'll even let you do the mowing while I weed, scarify and pay for the biscuits!

An astute mate of mine makes a tidy sum pushing leaves around in a vaguely constructive fashion and, especially as he appears to adore it, I admit to a significant quantity of jealousy.

 

[CityTrader]

I figure my 3 -4 hours of tennis a week, and 2 spinning classes gives me enough credits to eat and drink what I like. Trouble is, every year, the equation gets harder and harder to balance!!

( Can we get one of those sit on mowers for our new venture? I've seen them in Costco, and they do look very special!!)

 

[CityTrader]

and, this posting brings me exactly in line with your number of postings!

 

[frugi]

Well tis clearly my duty to go one post ahead by mentioning that the superbly tacky Costco jacuzzi is top of my wish list, followed closely by a glorious aluminum gazebo and then the ride on mower. Their selection of wares never fail to make me smile; in fact I've been known to go there purely for pleasure. Sad? Yep!