Any non-domicile UK resident traders here?

[Cutten]

Quote from lorax2013:

I'm not an expert on this but... If you are a US citizen, then when you set up the offshore account or corporation you are perhaps still going to have to provide your American passport and tax ID. (you won't have British ID will you?) Therefore, I don't see any advantage in doing this from the UK or the USA. The IRS is cracking down harder every year on these offshore corps/accounts. Although it is my understanding that you can still hide a corporation in many offshore countries, this is changing rapidly. As for opening the account in the UK, my understanding is that all your info is reported straight to the IRS (only Americans have this problem because the US govt is able to put so much pressure on other countries to report). If you were from some nation besides "the land of the free" it wouldn't be a problem.

If you're a US citizen then you have US tax liability on global personal income, unless you renounce your citizenship. I assumed zentrader was not a US citizen, but I guess he might be and was just unaware of this draconian policy (which only N Korea and a few other hellholes other than the USA follow).

If he is USA, then the tax haven route is a lot less attractive. I am not familiar with US tax law but he may still be able to operate an offshore company to compound gains tax free before remitting them to the UK or wherever he ends up living.

 

[zentrader]

I'm an Australian citizen. If the offshore company structure proves to be non-viable for me, I have also been wondering if I could be considered to pay capital gains rather income tax.

I read this article linked from the UK trading board (http://www.hmrc.gov.uk/manuals/bimmanual/BIM65701.htm) and it seems most kinds of speculative activity will be considered capital gains. Under the new 18% rate, that would be a great deal for me (effectively I'm paying almost 50%) here.

Cutten, do you know if I can write to HMRC to get a ruling on my situation? I would imagine before this new lower CGT rate, they didn't want traders offsetting losses from income to reduce their tax bill, so they wanted to classify everyone under CGT. Now with the lower CGT rate, they will probably be pretty quick to change their definition of 'trader' so if you're profitable, it comes under the higher income tax rate.

 

[forestfire]

2 Things to bear in mind.
1) If you are resident in the UK, then you are obliged to pay taxes on your income in the UK -it's as simple as that.
If it was legal to earn untaxed income then you would not have to hide it offshore.
Do not take an offshore lawyers word for it that their set-up is legal -many are just salesmen trying to sell you a product and earn commissions -they will not end up carrying the can when you get caught.
2) I have not heard of trading income being taxed as capital gains -if there is a way to do this that is advantageous, I would be interested to hear about it.

 

[wildkactus]

ZT,
The offshore route is good, know this works ok in asia, setup a OffShore trading company owned by an OffShore trust or foundtion. then setup an Onshore management company again owned by the Offshore trust / foundation and only pay tax on the income earned by this management company in the uk.
You would need to check with a local UK tax lawyer, to make sure this is ok for you.
Not only is this tax effective but it is good for asset protection as well.

 

[Businessman]

Quote from zentrader:


Cutten, do you know if I can write to HMRC to get a ruling on my situation? I would imagine before this new lower CGT rate, they didn't want traders offsetting losses from income to reduce their tax bill, so they wanted to classify everyone under CGT. Now with the lower CGT rate, they will probably be pretty quick to change their definition of 'trader' so if you're profitable, it comes under the higher income tax rate.

Yes you can write to the HMRC to get a ruling and it is likely to come back as CGT not income tax. Theres a thread on Trade2win where a trader wrote to the HMRC and they gave a favourable CGT decision. But you need to be careful in disclosing every relevant fact, if you miss something they dont have to keep the decision they gave you in writing..