According to HMRC, was I self employed?

[edgetrading]

I'm doing my personal tax return and am a bit stuck.

I traded via a limited company last year. I did not pay myself anything from the company during the tax year.

Do I need to list myself as self employed on my self assessment?

 

[donaldduke]

Talk to your accountant.

But i would guess not.

You neither self employed or employed by the sounds of things.

Technically if you are a director of the limited company that is what your status is as far as filling in your tax return.

However as the company doesnt pay you, im not sure if that counts as even being employed or not? (not that it seems to matter).

 

[shadowninja]

Doesn't matter. You're a company director, therefore an employee of the company. I've always spoken to HMRC and other relevant governmental organisation with this view in mind and have never been corrected. I think they would have picked up on it by now (incorporated in 1999).

 

[theSheik]

yes.

 

[advfntrader]

so you dint make any money trading then ? ;-)

 

[jaspertrademaster]

I agree you should check with your accountant. It would be a pity to get in trouble from such a small matter.

 

[donaldduke]

If its the Ltd company that owns the trading account.

The OP is therefore not self employed as far as i can see.

The OP doesnt take a salary for being either the Director or the 'Trader' employee roles.

But legally you must fill in a Self Assement Return as company Company Directors must do this by law.

If the OP has no income and everything is left in company, his Tax return will be empty, he would just need to sign it.

The Ltd company has its own tax returns that must do every year.. thats where any profits will be declared.

 

[songcon]

I'm doing my personal tax return and am a bit stuck.

I traded via a limited company last year. I did not pay myself anything from the company during the tax year.

Do I need to list myself as self employed on my self assessment?

Your gain on trading is classified as capital gain to be reported on the Schedule D ( the same schedule with the US return). Capital gain has different rate, and is not subjected to self-employment taxes.

In the US there is a legal entity called Limited Liability Company for the benefits of shielding the tax liabilities from the owners. Any net earnings from the LLC will flow to the owner, the line on Schedule D will flow to the schedule D on the personal tax return.

LLC owners do not have to pay tax on net earnings of the LLC, it will flow to the owner, any draws from the LLC is considered as loans. There is small "corporation" which has very similar tax treatment like a LLC but you are required to pay a fair wages to you on this format of business.

To sum it up, I'm fairly sure that you're not subject to the self employment on the capital gain of your limited company. Yes, it's capital gain and will flow to your personal income tax as capital gain, and it's different than the "net income" of the limited company.

Talk to a lawyer or an accountant on the subject, it wouldn't cost you much.

Cheers,

Attached: U.K. taxers per wipikedia:

Schedule D (tax on trading income, income from professions and vocations, interest, overseas income and casual income)
[COLOR="Purple"]Capital gains tax[/COLOR]

[COLOR="Purple"]Capital gains are subject to tax at the 18% (for individuals)[/COLOR] [COLOR="RoyalBlue"]or at the applicable marginal rate of corporation tax (for companies).[/COLOR]

The basic principle is the same for individuals [COLOR="Sienna"]and companies[/COLOR] - [COLOR="RoyalBlue"]the tax applies only on the disposal of a capital asset, and the amount of the gain is calculated as the difference between the disposal proceeds and the "base cost"[/COLOR], being the original purchase price plus allowable related expenditure. However, from 6 April 2008, the rate and reliefs applicable to the chargeable gain differ between individuals and companies. Companies apply "indexation relief" to the base cost, increasing it in accordance with the Retail Prices Index so that (broadly speaking) the gain is calculated on a post-inflation basis (with different rules apply for gains accrued prior to March 1982). [COLOR="DarkSlateGray"]The gain is then subject to tax at the applicable marginal rate of corporation tax. [/COLOR]Individuals are taxed at a flat rate of 18%, with no indexation relief (but subject to a limited relief for the first £1m of gains for "entrepreneurs") [4].

A capital gain is a profit that results from investments into a capital asset, such as stocks, bonds or real estate, which exceeds the purchase price. It is the difference between a higher selling price and a lower purchase price, resulting in a financial gain for the investor.[1] Conversely, a capital loss arises if the proceeds from the sale of a capital asset are less than the purchase price.

[COLOR="RoyalBlue"]Capital gains may refer to "investment income"[/COLOR] that arises in relation to real assets, such as property; financial assets, such as [COLOR="RoyalBlue"]shares/stocks or bonds[/COLOR]; and intangible assets such as goodwill.

Many countries impose a tax on capital gains of individuals or corporations, although relief may be available to exempt capital gains: in relation to holdings in certain assets such as significant common stock holdings, to provide incentives for entrepreneurship, or to compensate for the effects of inflation.

[COLOR="Blue"]http://en.wikipedia.org/wiki/Taxation_in_the_United_Kingdom[/COLOR]

 

[theSheik]

no offence songcon, but you have just completely invalidated the whole of your post by simply linking to wikipedia !!!

 

[songcon]

no offence songcon, but you have just completely invalidated the whole of your post by simply linking to wikipedia !!!

No, I want to provide the basis for him to talk to his accountant. The capital gain
tax, I want to make sure that it's the same way with the US system. I mentioned
about the liability companies, the concept of flowing through and the taxing concept.

It's something that I've just learned in helping a person. Yes, I can give a long
lecture about capital gain tax in the UK and also the US without providing the source
but I honestly provide him the source of information so that he could do additional research.

How many people have discussed the subject, did anyone talk about the capital gain
concept and the self-employment taxes involved.

Thanks for your advice but again, I only tried to share something that I've just learned.
You can read the Wikipedia to provide additional help for him if you wish.

Cheers,

 

[shadowninja]

You don't have owners of Limited Companies. Nobody owns a limited company. It is a separate legal entity.