UK Tax

UK Tax Questions? Ask a UK Tax Advisor for answers ASAP

Ask an Expert,
Get an Answer ASAP!

UK Tax
This answer was rated:

Hi, I work as a day trader from home trading forex full time

as my only source of...
Hi, I work as a day trader from home trading forex full time as my only source of income. How do I structure myself to pay the least possible tax? I am based in the UK.
Show More
Show Less
Ask Your Own UK Tax Question
Answered in 3 minutes by:
10/4/2010
Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 15,956
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
Verified
Hi.

Can you tell me how you trade forex. Do you use a spread betting account or a retail forex broker? How much money do you make in a year?
Ask Your Own UK Tax Question
Customer reply replied 7 years ago
Hi Tony.

I trade using a retail forex broker.

I have only just gone full time so can't tell you how much I make in a year. However, I anticipate making approx £75k - £150k in my first year at a very rough guess.
Thanks.

If you trade as a sole trader, the first £6,475 of your profit in 2010/11 will be tax free, the next £37,400 will be taxable at 20%, the next £106,125 will be taxed at 40% and anything over £150,000 will be taxed at 50%. You'll pay Class 4 NIC at 8% on profits between £5,715 and £43,875 and at 1% on profits above that. If you choose this route you need to register as self-employed within three months of starting out or face a £100 fine. You can register as self-employed here.

If you trade through a limited company, profits up to £300,000 will be taxed at 21%, the small companies rate of corporation tax. Any money you draw as salary will need to be subjected to income tax and national insurance contributions through a PAYE scheme as you will be an employee/director of the company. As well as income tax (above the personal allowance of £6,475) you will pay employees national insurance contributions at 11% on earnings above £5,720 per annum up to £43,875 and at 1% above that level and the company will have an employer's national insurance contributions liability at 12.8% on the salary it pays you in excess of £5,720 per annum. The salary and employer's nic are tax deductible expenses for the company.

You can withdraw profits in the form of a dividend which is treated as basic rate tax paid so if you drew nothing but dividend you could take out £39,487.50 net (£43,875 gross) and have no further personal tax to pay. above that level, dividends are taxed at 32.5% less the 10% tax credit and over £150,000 at 42.5% less the 10% tax credit. Dividends aren't subject to national insurance contributions. The dividend carries a notional 10% tax credit but none of this is repayable. The dividend is not a tax deductible expense for the company. It is paid out of after tax profits.

Many people starting out in business for the first time choose to use the sole trader route initially as setting up a company and complying with the red tape that comes with it can be time consuming and expensive if you use an accountant. You can always incorporate your business into a limited company later on.

You might find the website here useful.

Let me know if you have any queries.

Edited by Tony on 10/4/2010 at 7:29 PM EST
Ask Your Own UK Tax Question
Customer reply replied 7 years ago
Thank you for your answer.

If I go the sole trader route, how do I pay the tax? Do I have to fill out a tax return and how frequent is this?

Thank you for the website link as well.

Hi again.

You need to register as self-employed. You'll receive a tax return after the end of the tax year on 5 April 2011. The tax payable for 2010/11 will need to be settled by 31 January 2012. If your liability is over £1,000, you will need to make payments on account for 2011/12 on 31 January 2012 and 31 July 2012, each one equal to your 2010/11 liability. If you think your liability for that year will be less you can apply to have the payments on account reduced. Any further tax payable for 2011/12 will be payable on 31 January 2013, together with the first payment on account for 2012/13. And so it goes on. You receive one tax return per year.

If you choose the self-employed route, I'd draw your accounts up to 5 April to coincide with the end of the tax year. It will make life easier.

Edited by Tony on 10/4/2010 at 7:51 PM EST
Ask Your Own UK Tax Question
Customer reply replied 7 years ago
OK great and just last few questions... What records do I need to keep? As I am a trader, will I need to show profit/loss statements from my broker? Bank statements?

I will be drawing profits from my trading account to my bank account every month, are there any restrictions on how much money as am able to use as income?
Hi again.

Keep trading statements, bank statements and any other paperwork related to the business including expenses receipts.

I'm not sure what you mean by "restrictions on how much money as am able to use as income". As a sole trader, you will be taxed on your profit regardless of whether you draw it out of your trading account or not.
Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 15,956
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
Verified
Tony Tax and 87 other UK Tax Specialists are ready to help you
Ask your own question now
Ask Tony Tax Your Own Question
Tony Tax
Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 15,956
15,956 Satisfied Customers
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.

Tony Tax is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Sam

Sam

Accountant

6,512 satisfied customers

26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax

bigduckontax

bigduckontax

Accountant

871 satisfied customers

FCCA FCMA CGMA ACIS

TEAP007

TEAP007

Tax Preparer

759 satisfied customers

Fully Trained Inspector of Taxes / District Inspector/ Team Leader/ Offshore Consultant/ 41 years

Andrew Baker(baktax)

Andrew Baker(baktax)

Personal Tax Adviser

756 satisfied customers

35+ years experience in income tax, CGT, non-residence

berduchwal

berduchwal

Accountant

669 satisfied customers

Qualified accountant and bookkeeper running my own practice since 2008.

Clare

Clare

Solicitor

148 satisfied customers

25 years exeperience as a high street solcitor

Mrs-Tax

Mrs-Tax

Tax Adviser

59 satisfied customers

Law Degree, 19 years in UK Tax.

< Previous | Next >

Related UK Tax Questions
An individual Landlord who owns 6 properties has bought a
An individual Landlord who owns 6 properties has bought a laptop c£800 - can he claim Capital Allowances for it as he uses it to keep his records on and manage his 6 properties? Thanks CAS… read more
Sam
Sam
Accountant
Higher Officer HMRC
6,512 satisfied customers
I am confused so I rang HMRC. Now I'm even more confused!!!.
Hi Sam, I am confused so I rang HMRC. Now I'm even more confused!!!. I am UK resident.I am currently employed PAYE. I have been offered a job by a UK based company, working on a RAF base in the Falkla… read more
Sam
Sam
Accountant
Higher Officer HMRC
6,512 satisfied customers
I am self-employed in the UK, and I do contract work for a
Hi there. I am self-employed in the UK, and I do contract work for a company based in the USA. I get paid in dollars for that contracted work on a per-month basis, based on what work I do & days worke… read more
taxadvisor.uk
taxadvisor.uk
Accountant and Tax Practitioner
Chartered Certified Accountant - FCCA
3,095 satisfied customers
I have setup a partnership UTR with my wife (property
I have setup a partnership UTR with my wife (property management) treated as a Trading business . My turnover from rental income is just under £83,000. But if it did go above that would I have to regi… read more
bigduckontax
bigduckontax
Accountant
FCCA FCMA CGMA ACIS
871 satisfied customers
I would like some advice on is on Capital Gains Tax, more
I would like some advice on is on Capital Gains Tax, more specifically, the 10% Entrepreneurs' Relief option. In May 2015, I sold part of my business, which was a website. The total sale value was $29… read more
Sam
Sam
Accountant
Higher Officer HMRC
6,512 satisfied customers
I'm trying to figure out why my P60 doesn't account for the
I'm trying to figure out why my P60 doesn't account for the taxes paid when my RSU vest. It seems that they put the full amount of shares vested but they don't surface the almost 54% taxes already pai… read more
bigduckontax
bigduckontax
Accountant
FCCA FCMA CGMA ACIS
871 satisfied customers
I've got an interest only buy to let mortgage for £112000 I
I've got an interest only buy to let mortgage for £112000 I was going to put £18000 down it ,which would reduce the monthly to about £220 per month .I currently get £595 per month rent .is it worth in… read more
taxadvisor.uk
taxadvisor.uk
Accountant and Tax Practitioner
Chartered Certified Accountant - FCCA
3,095 satisfied customers
I sold an investment in December 2017 for 100,000 GBP (net
I sold an investment in December 2017 for 100,000 GBP (net sales proceeds) . I bought the investment 15 years ago in 2002 for the total cost of 40,000 GBP I have been working overseas as an expatriate… read more
bigduckontax
bigduckontax
Accountant
FCCA FCMA CGMA ACIS
871 satisfied customers
My friend wants to buy annual leave from her work which then
Hi my friend wants to buy annual leave from her work which then is deducted through her wage over 12 months. Will buying annual leave affect her tax credit… read more
bigduckontax
bigduckontax
Accountant
FCCA FCMA CGMA ACIS
871 satisfied customers
I'm trying to fill in my Micro Entity accounts and it keeps
Hi I'm trying to fill in my Micro Entity accounts and it keeps coming up shareholders funds must equal net assets. Not really sure why can you help please? … read more
taxadvisor.uk
taxadvisor.uk
Accountant and Tax Practitioner
Chartered Certified Accountant - FCCA
3,095 satisfied customers
Regarding self assessment taxes. I'm a USA and UK citizen
Regarding self assessment taxes. I'm a USA and UK citizen and will need to file USA and UK (self assessment) tax returns. Both countries tax on worldwide income.In the USA I have a retirement account … read more
Sam
Sam
Accountant
Higher Officer HMRC
6,512 satisfied customers
I am submitting my Micro HMRC accounts first year for
Hi there I am submitting my Micro HMRC accounts first year for company - if I sen you our balance sheet could I have you tell me what box information needs to be filled in. I would be willing to pay o… read more
taxadvisor.uk
taxadvisor.uk
Accountant and Tax Practitioner
Chartered Certified Accountant - FCCA
3,095 satisfied customers
I am the director of our non profit organisation and am not
Hi I am the director of our non profit organisation and am not getting paid at the current date due to raising funds however I put in a lot of hours per week can I claim working tax credits along with… read more
bigduckontax
bigduckontax
Accountant
FCCA FCMA CGMA ACIS
871 satisfied customers
A person has dual residence in England and Greece with
A person has dual residence in England and Greece with income in both countries. 1.Do both Incomes have to be declared in the UK? 2.Is there a form which needs to be completed to inform the HMRC in UK… read more
TaxRobin
TaxRobin
Vocational, Technical or Trade School
1 satisfied customers
In February 1999 I bought my first house. The listed price I
Hi – in February 1999 I bought my first house. The listed price I paid was £30,500 (paid between deposit and mortgage). In June of 2008 I married and in July of that year I quit my job and my wife and… read more
bigduckontax
bigduckontax
Accountant
FCCA FCMA CGMA ACIS
871 satisfied customers
My question regards taxation on earnings that I have been
My question regards ***** ***** earnings that I have been paid in Bitcoin.I am a sole trader working in the online marketing space, residing and paying tax in the UK.I have been providing marketing se… read more
TaxRobin
TaxRobin
Vocational, Technical or Trade School
1 satisfied customers
A couple of years ago my employer closed the office I worked
A couple of years ago my employer closed the office I worked at (which was located a few miles from my home) and asked me to instead work from home, travelling to their other UK office (about 100 mile… read more
bigduckontax
bigduckontax
Accountant
FCCA FCMA CGMA ACIS
871 satisfied customers
If I give money to a US LLC to trade cryrocurrenxies for me,
If I give money to a US LLC to trade cryrocurrenxies for me, how will I be taxed in the U.K.?… read more
bigduckontax
bigduckontax
Accountant
FCCA FCMA CGMA ACIS
871 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x