Most Tax-Efficient Set Up?

[The Leopard]

Are there any UK-based futures traders that have any particularly good ideas on ways to structure my trading activities to minimise tax implications?

I'm going to see someone about it but thought it would be nice to have a few ideas in mind before I do.

 

[rsh01]

Are there any UK-based futures traders that have any particularly good ideas on ways to structure my trading activities to minimise tax implications?

I'm going to see someone about it but thought it would be nice to have a few ideas in mind before I do.

i used to go through a loan based scheme when working in the city (though not as a trader) - i paid about 20%-22% total (a little more than jimmy carr), its still operating and covers income through trading when i last spoke to them.

if you require more info then the companies i know of were cascade & dms - both in london. they do have other structures but i do not know the details.

 

[scose-no-doubt]

You can't set up new loan dealies any more afaik.

The best answer is subjective cos it's dependant on your cash needs really. You're just better off talking to the tax geezers

 

[The Leopard]

You can't set up new loan dealies any more afaik.

Where did you hear that? They're still being advertised at any rate.

The best answer is subjective cos it's dependant on your cash needs really. You're just better off talking to the tax geezers

Naturally. I'm just wondering if there are any peeps on here willing to give a few pointers as to possibilities.

Thanks to Teh Scose and RSH for their inputs.

 

[rsh01]

You can't set up new loan dealies any more afaik.

can you post the link saying the law has been changed....cannot find anything on it.

tax management companies know of various loopholes which they aim to take advantage of and the 'recallable' loans was just one. when law changes they replace them which i wld expect has happened here, if that loophole has indeed been closed.

edit: they work on the principle that the loophole can & will be closed down soon, and as that is ultimately their business model, they obviously have contingency in place when that happens......else they go bust.

 

[scose-no-doubt]

When HMRC closes a loophole they can't apply the changes retrospectively so if a controlled and operated scheme rather than an individual's scheme is already then there's a chance it can still go through but who's to say what's been diddled with the HMRC declaration and where they're actually putting the money? I know first hand that they closed down a few of the Cyprus based loan dealies from April gone so I'm assuming the only ones left will be in Jersey/Isle of Man type places and they are not easy = not cheap or more exotic/less regulated places which obviously offer a different set of problems.

I've heard from a sneaky prawn for those looking for something simple, UK based and transparent, that prop firms' (or at least one at any rate) advisers generally favour a LLP type structure with an individual/corporate partner split which should be fairly attractive given the new sub 20% Tory CT rates for under 300k but again this can cause a different set of issues. I didn't get to prod enough to figure out how (if at all) the bookies were dealing as I didn't want to be too obtrusive yadda yadda with said issues (mainly corporate classifications and issues re main rate tax) but with 10% at risk it's more than a bit of an issue IMO.

Good luck anyhow and I'd be very interested to hear what they come back to you with if you don't mind sharing... by confidential email of course.

 

[scose-no-doubt]

Take what I say with a pinch of salt btw as I don't specialise in this stuff and only come across it intermittently

 

[NVP]

Are there any UK-based futures traders that have any particularly good ideas on ways to structure my trading activities to minimise tax implications?

I'm going to see someone about it but thought it would be nice to have a few ideas in mind before I do.

lose money ? (sorry - couldnt resist )

 

[scose-no-doubt]

loose

 

[NVP]

i used to go through a loan based scheme when working in the city (though not as a trader) - i paid about 20%-22% total (a little more than jimmy carr), its still operating and covers income through trading when i last spoke to them.

if you require more info then the companies i know of were cascade & dms - both in london. they do have other structures but i do not know the details.

going going gone..........Nick Clegg is on a mission now to get street smart people to pay more tax it seems after his summer holiday .... so everything being shut down

N

 

[The Leopard]

lose money ? (sorry - couldnt resist )

Loose money - also couldn't resist.

EDIT:

Teh Scose beat me to it.

 

[rsh01]

lose money ? (sorry - couldnt resist )

good point though, can you bring previous loosses (?) forward and net off against current year taxable income?

you should be able to as it is in effect an investment into your business.

(assuming you did loose some money in the early stages).

TL, interested to hear how the meeting goes tmrw.

 

[The Leopard]

good point though, can you bring previous loosses (?) forward and net off against current year taxable income?

you should be able to as it is in effect an investment into your business.

(assuming you did loose some money in the early stages).

TL, interested to hear how the meeting goes tmrw.

Not tomorrow, still researching firms I want to speak to. I have some experience in the industry, but nothing really of this type.

 

[scose-no-doubt]

You can only offset losses of one trade against future losses of that same trade. You'd have very little chance of selling a new structure as a continuation to HMRC. Now if you were to have an LLP with a corporate partner I think I could make a case as I've done similar for property owners.

 

[Liquid validity]

good point though, can you bring previous loosses (?) forward and net off against current year taxable income?

you should be able to as it is in effect an investment into your business.

(assuming you did loose some money in the early stages).

TL, interested to hear how the meeting goes tmrw.

Yes thats perfectly legit, a loss for any tax year within the last 3 can be offset
against this years tax. Any left over is allowed to be carried forwards to offset
against later tax years. Pretty sure you can only go back 3 years when offsetting a loss.

 

[Liquid validity]

As far as staying completely within tax regs and not exploiting tax loopholes:

There isn't much of a way around income tax per se, not without loopholes anyway.
Best start would be to form a limited company as a wrapper for your trading.
Give company secretary role to spouse, family member etc.

That allows director and secretary salaries, obviously take both up to the
lower rate tax threshold first before you have to pay upper rate tax,
in other words, no point one salary being 20k over higher rate tax threshold,
whilst secretary salary is 10k under threshold.

That allows excess profits to be contained within the Ltd. co. thus only paying
corporate tax which as scose said is much lower up to 300k than income tax.
Trouble is you can't use it as income without paying income tax.
Simple, as part of the Ltd. co. invest in stocks for dividends using options to
offset capital loss for instance.
Invest in rental property - rental income can stay within Ltd. co. as well.
That gives you the option of releasing capital by selling property and only paying CGT.
Then there's bonus, pension, expenses and so on...

Some links:

Corporate tax:
HM Revenue & Customs: Introduction to Corporation Tax
HM Revenue & Customs: Corporation Tax rates
HM Revenue & Customs: Marginal Relief for Corporation Tax

Ltd co. info:
Ltd Company Formation: Express Accountancy Ltd - Formation Agents
Making tax efficient use of excess company profits
Cutting Your Corporation Tax Liability Through Expenses - The Tax Guide
Cutting Your Corporation Tax Liability Through Bonuses - The Tax Guide

Essential warning though, assume everything on the internet
to do with tax is bullsh1t until confirmed or not by a tax adviser...

 

[rsh01]

Some good comments and links there LV.

 

[The Leopard]

Thanks LV, but that kind of thing I have quite a lot of experience with and easy access to.

As far as staying completely within tax regs and not exploiting tax loopholes:

There isn't much of a way around income tax per se, not without loopholes anyway.
Best start would be to form a limited company as a wrapper for your trading.
Give company secretary role to spouse, family member etc.

That allows director and secretary salaries, obviously take both up to the
lower rate tax threshold first before you have to pay upper rate tax,
in other words, no point one salary being 20k over higher rate tax threshold,
whilst secretary salary is 10k under threshold.

That allows excess profits to be contained within the Ltd. co. thus only paying
corporate tax which as scose said is much lower up to 300k than income tax.
Trouble is you can't use it as income without paying income tax.
Simple, as part of the Ltd. co. invest in stocks for dividends using options to
offset capital loss for instance.
Invest in rental property - rental income can stay within Ltd. co. as well.
That gives you the option of releasing capital by selling property and only paying CGT.
Then there's bonus, pension, expenses and so on...

Some links:

Corporate tax:
HM Revenue & Customs: Introduction to Corporation Tax
HM Revenue & Customs: Corporation Tax rates
HM Revenue & Customs: Marginal Relief for Corporation Tax

Ltd co. info:
Ltd Company Formation: Express Accountancy Ltd - Formation Agents
Making tax efficient use of excess company profits
Cutting Your Corporation Tax Liability Through Expenses - The Tax Guide
Cutting Your Corporation Tax Liability Through Bonuses - The Tax Guide

Essential warning though, assume everything on the internet
to do with tax is bullsh1t until confirmed or not by a tax adviser...

 

[Liquid validity]

Some good comments and links there LV.

Cheers, I personally think its beneficial to learn and understand as much about tax
yourself rather than relying on advisers / accountants (nothing wrong with that though).

At the end of the day, its not the adviser / accountant that gets any fines for
f**k ups, so it always pays to have at the very least an outline understanding of tax.
Thats all I have though - an outline understanding of tax.
Do not take anything I say as gospel without further research.

 

[robster970]

To add to LV's post, form a SSAS for the corporate entity too. Then you can transfer disparate pensions into it, make a secured loan from the SSAS to the Ltd company and use it as additional trading capital. Repay loan back to SSAS and increase value of SSAS by making payments to your pension scheme on profits generated.

e2a - you can only loan up to 50% of the pension value to the ltd company but this forces diversification and is no bad thing imo