Trading from home - employment status.

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Kula

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Hi everyone.

Just a quick introduction and a couple of questions.

I have worked in the "market" for nearly nine years now. The first half was spent working as a Dealer for one of the largest UK Stockbrokers and the second half with as an Equities Trader for a UK Marketmaker.

At the end of February this year I took a voluntary redundancy package and decided to trade from home.

At the moment I am using spread betting as my access to the martket (mainly due to lack of sufficient equity for direct access).

I am therfore unemplyed. Because I resigned I am unable to claim any benefits (I wouldn't be able to claim anything as I am not actively seeking employment). I have checked with the Inland Revenue and after getting passed from pillar to post eventualy I spoke to a Manager who stated that the Inland Revenue did not want to know anything about my Spreadbetting activities. Fair enough.

However I do have a concern that at the moment I am not paying any National Insurance contributions. I have checked online on various sites regarding paying NI contributions but I do not "fit" into any of the categories mentioned.

My other query regarding my Employment status is this :- I am about to fill in an application form (not for a job). This form requires me to state my occupation and place of business. I am not sure what to write. " Self Employed Equites Trader"? "Day Trader"?

It would be helpful if any of you who are in the same position, ie trading full time from home and your sole income comes from trading, to let me know what you think.

Thankyou in advance,

Kula.


Oh and meant to say I have been reading the forums for about a month now. Excellent Site.
 
Well you are unemployed, you are not a day trader or equities trader.
In the eyes of the law Spread betting is gambling. You will not be taxed on it ever, unless they
change the law or you are using it hedge real market positions.

Perhaps if you were trading real financial instruments full time you might be classed as carrying on a
trade.

Personally i trade through a limited company, so my situation is clear. However you dont need
to trade through a limited company to be classed a trader. A normal trading account will do.

If you dont have the money to trade with and arent doing it properly then why do you want to call yourself a
trader?
 
My other query regarding my Employment status is this :- I am about to fill in an application form (not for a job). This form requires me to state my occupation and place of business. I am not sure what to write. " Self Employed Equities Trader"? "Day Trader"?

Mmm tricky one this :idea: How about taking a part time job, this may help!
 
I would suggest you keep up National Insurance contributions to cover yourself for any future eventuality where you may need to claim benefits / state pension. It doesn't cost much each quarter, and you can pay in a variety of ways. On the N.I. form I would just state you're a Self Employed Financial Trader if you are properly serious about making a go of trading full time.

Also, look into claiming tax credits. You may be eligible and they could well help you in those lean first few months / years as you find your feet as a member of the self employed.

Good luck and try not to live beyond your new financial means.
 
Regarding your first question, Kula, you can make class 3 voluntary NI contributions while unemployed, if you are worried about making a dent in your state pension entitlements while you find your feet. They are fixed, reasonably modest, can be backdated and you have plenty of time to do it.

http://www.businesslink.gov.uk
 
Frugi is right. Protect your future state pension.
Can you teach part time at a Further Education college maybe? and spread bet the Dow etc in the evenings?
 
Firstly thankyou for the promt replies.

"If you dont have the money to trade with and arent doing it properly then why do you want to call yourself a
trader?"

I appreciate your point of view however, I disagree. I have decided that I do not have enough money for direct access (I would not consider Direct Access untill I have at the very least £100K). I have proved (so far) that I am able to use Spread Betting as a viable means to making a living. After 2 months of "trading" I am returning not much less than my after tax wage from my previous employer (not a boast but a statement in response to your opinion that I "..arent doing it properly.." And I am planning on substantially increasing this return every month. I have just been taking it slowly to start with because there is a distinct difference between trading my own hard earned cash and the cash from the deep pockets of a UK Market Maker.
I call myself a "trader" because this is what I am. I am merely gaining access to the market via a Spread Betting account. I am earning my sole living by speculating in Equities and Indicies. If you think that I am inelligible (spelling?) to call myself a trader what would you call me? Please keep it civil :)

"Mmm tricky one this...How about taking a part time job, this may help!"

Yes that would mean that I am able to put a specific job title down but I have no interest/desire/need in taking a second job. The only time I would consider this is if for some reason my "Unemployed" status would hinder things. I am not ruling this option out altogether.

"I would suggest you keep up National Insurance contributions to cover yourself for any future eventuality where you may need to claim benefits / state pension. It doesn't cost much each quarter, and you can pay in a variety of ways. On the N.I. form I would just state you're a Self Employed Financial Trader if you are properly serious about making a go of trading full time.

Also, look into claiming tax credits. You may be eligible and they could well help you in those lean first few months / years as you find your feet as a member of the self employed.

Good luck and try not to live beyond your new financial means."

Thankyou Bluewave. I wasn't sure about the "Self Employed" bit. As I am not paying any taxes so I wasn't sure if this was a viable thing to say. I will contact Inland Revenue today for a bit more clarification. I will also look into tax credits.

"Regarding your first question, Kula, you can make class 3 voluntary NI contributions while unemployed, if you are worried about making a dent in your state pension entitlements while you find your feet. They are fixed, reasonably modest, can be backdated and you have plenty of time to do it."

Thanks Frugi/Fran I will start sorting this out ASAP.

Thanks again for the responses.
 
I know how you feel Kula. I gave up my job when the firm I worked for got taken over and I couldn't stand it any longer. (In the coffee business actually). Got into trading via spreadbetting while I was looking for a new job and found I was making more money than my previous take home pay.
Now over 3 and a half years later I am still doing the same thing!
I have a letter from IR stating that my earnings free from CG and Income Tax and at the moment pay voluntary NI payments. I consider myself a Professional Trader and self employed - just my earnings are not taxable (not my fault, just the way it is)
The only problem you have is trying to get proof of earnings for mortgage purposes etc so I have to pay cash when I change cars and such - but hell its a small price to pay.
Good luck - its well worth it if you can do it.
Regards
Pringle
 
Hi Pringle, thx for the reply.

I agree with the "proof of earnings.." problems. Hopefully this wont be much of a problem for me in the short term. I don't have any plans to move house and I don't have any need to apply for credit for anything. But circumstances change unexpectedly so I guess I'll just have to deal with any problems when they arise.

Does your daily/monthly printouts of your spreadbet transactions not count as proof of earnings?

I did contact Inland Revenue again and they are sending out a form for me to pay Class3 voluntary NI contributions.
 
just my thoughts,


The IR ask you to declare all forms of income, the fact that SB is not taxable it does not change the fact that you are earning an income. this income can be proved with accounts from an accountant, if the "what do I call myself bothers you" why not sell a few things on ebay and call yourself a general trader?.

This may sound stupid but loans companies are not interested in what you exactly do
the info they are really after is proof of income as in a letter from your accountant, unless of course you tell them your a gambler that gambles on the movement of stocks and shares!
 
neil said:
Frugi is right. Protect your future state pension.
Can you teach part time at a Further Education college maybe? and spread bet the Dow etc in the evenings?
Click to expand...

If you have more than one child under 16, then it might be worth making sure that you claim child benefit for one of them. (Often, one parent - usually the mother - claims for all of them). My understanding is that doing this will ensure that your pension contributions are paid by the Government on your behalf. I think it's called HRP (Home Responsibilities Protection). It's worth telephonong the Child Benefit Agency to get all the details.

Regards,

Ivor
 
Thx for the advice Ivor. We don't have any kids at the moment but this could change in the future.
 
Kula,

You are unemployed albeit you gamble on a serious basis. Why do you wish to complicate things? You can pay voluntary National Insurance Contributions whilst unemployed and thus protect your future pension benefits. You will find that you are probably not entitled to Family Tax Credits etc because you have savings and capital which exceed a certain level. Besides, the benefits you may receive are outweighed by the problems they may lead to at a later date (assuming you continue to be successful).

What you tell family, friends and associates is your choice but you need not complete forms stating that you are a 'Trader'; what will it achieve? You will not get a mortgage because of that unless your accountant proves your income; besides if you have a 20% deposit towards a house purchase, the lender is not particularly interested in what you do and they do not require proof of income either.
 
I appreciate what you are saying Lion63. I am not trying to complicate things. I spoke to the Inland Revenue regarding my "status" and they stated that I was not officially classed as "Unemployed" because I am not registered as unemployed/claiming any benefits. My status according to the IR is "Not Employed" which is different from being unemplyed.

"...but you need not complete forms stating that you are a 'Trader'; what will it achieve?"

The reason I was asking about what to put on the form was that my details will be scrutinised by the Police ( I won't bother going into details about the form as it is a private matter). This was the reason I did not want to lie on the form. For me to say I am Unemployed is technically incorrect according to the IR. To say that I am Self Employed is also incorrect. Hence my predicament.
 
whatever you do, don't claim any losses you may make from spreadbetting against your taxable income or the IR will tax your spreadbetting profits
 
Just to add another angle:
I was made redundant almost 2 years ago and have been searching unsucessfully for employment.
I signed on and got Jobseekers allowance for 6 months. Since then I sign on once a fortnight and get my NI paid.
I determined 6 months ago to try and extend my trading. Up to then I simply had about £10k in a few shares. I have been seling/buying and making small profits (enough to pay the milk bill!). I have also been spending a lot of time learning the principles of SB and will shortly launch into the foray.
Will I still sign on? Possibly. Only proviso is that you have to demonstrate that you have been actively looking for work.
 
Pringle said:
I
The only problem you have is trying to get proof of earnings for mortgage purposes etc so I have to pay cash when I change cars and such - but hell its a small price to pay.
Good luck - its well worth it if you can do it.
Regards
Pringle
Click to expand...

Cash? I assume you mean you pay by bank TT/ debit card whatever? Even so, I can't understand why. I remortgaged 15 months ago- increasing the size of my mortage to buy another property, I have at least 4 credit cards sucsessfully applied for , and 1 car loan - all this year, and I haven't been an employee for over 2 years!
 
'' I appreciate your point of view however, I disagree. I have decided that I do not have enough money for direct access (I would not consider Direct Access untill I have at the very least £100K).''

Kula, I can't agree with that.Having say 50k in say an etrade direct access account will give you the leverage to trade 500k worth of any uk stock.If you are any good at direct access trading (and with your experience, you ought to be at least capable), you really ought to be able to generate 50-100k worth of profits per year comfortably as a daytrader esp. as you seem to be doing well spreadbetting.
My advice, fwiw, is to start using direct access asap. Good Luck.
 
Just one point. If you made your life out of spreadbetting, the inland revenue can tell you that if this is your main income you have to trade thru a business and therefore you will be liable to pay taxes. But obviously, ask to an expert. It's always to be in the system and to operate thru a company. You will do your NI contributions, your bank will give you loans, etc.
 
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