For UK residents, at least, people are generally taxed like this: (very roughly in £) First 5k free Next 2k 10% 7k to 32k 22% Above 32k 40% The 22% will be reduced to 20% in a year or two and the 10% band will disappear. This is income tax, paid by self-employed people and employees alive. http://www.hmrc.gov.uk/rates/it.htm A trader is considered an ordinary self-employed person if he convinces the IR he is doing more than just dabbling in stocks, i.e. it is his full time job and he is trading his own account for himself (as opposed to a bank or whatever). Self-employed folk also pay National Insurance at 8% of gross income minus the free 5k allowance, up to around 30k then 1% on the rest. Stalinist Brown is a robbing bastard. Though this NI rate is marginally better than an employee's. Expenses such as data, commission and software can be deducted. http://www.hmrc.gov.uk/rates/nic.htm Some people set up a limited company which has different rates and can save money as corporation tax tends to be lower if you earn enough, as it is set at a flat rate, 20% I think. But accounting procedure is much more stringent. http://www.hmrc.gov.uk/rates/corp.htm I fill in my own tax form as a sole trader (no company) and it's very simple ... just a few of boxes and no need to go through 500 statements with a microscope ... yet. However people with other jobs who invest on the side pay capital gains tax instead on their investment profits. This has a tax free band of around 9k p.a after which you pay tax as if it were your top slice of income. So it might be 20% or 40% depending on what you've earned from your job. http://www.hmrc.gov.uk/rates/cgt.htm I'm not sure what the situation is for prop /arcade traders. I'm not sure if you are planning on working here as a full time trader or just worried about extra tax on your US investments while you work a different job here. Normally if your income arises in the UK and you are domiciled here then you will pay tax on it. This would include trading full time here, but probably wouldn't include fettling your US-based portfolio when you get home from work, provided you don't bring any of the profits into the UK. If you do they'd probably want some capital gains tax off you. People who live on the Isle of Man which is part of the UK but has its own laxer tax laws are apt to bring in suitcases of cash to get around this problem (no paper trail)! Here is a pdf about domicile which may be useful, though possibly out of date. http://www.hmrc.gov.uk/budget2003/residence_domicile.pdf The IR site hmrc.gov.uk has loads of info about our arcane tax system, though personally in your position I'd be inclined to consult an accountant or tax lawyer as our laws are complicated. The good news is there should be no red tape preventing you trading the whole gamut of derivatives to your heart's content. Though UK stocks carry a 0.5% stamp duty on purchase. Which is why most Brits trade yours instead.
Basically this is correct. The only thing to bear in mind if the trading tax bill in the UK is much less than that your US one. Then you obviously want your trading taxed in the UK if possible. For example in the UK, the first 9K GBP (18K USD) per year of capital gains are tax free. After that (assuming you are already in decent paid employment) gains are taxed at 40%.