UK taxation for futures and options trading

I think this explains it better- but a loss can be used to offset tax in a number of ways.https://www.litrg.org.uk/tax-guides...es-and-capital-allowances/what-if-i-make-loss

 

I'm UK based and trade options almost exclusively. I have two accounts, one is in my personal name and the main one is in the name of my LTD company.
For the personal one, I used the CGT rules for the profits on my annual tax returns, and for the LTD one it's a basic corporation tax calculation, like for any other business. My accountant had to scratch his head a little a few years ago and spoke to his specialist friends in the industry when he first did my LTD company accounts. Now it's a doddle for him.

The reality is that until recently, there have been so few derivatives traders in the UK, that I doubt if the HMRC themselves have anyone knowledgeable to know what to do.

 

Oh don't I know that! Tring top explain selling an option that I don't own! I just say it's exactly like insurance- I've had so man yletters this year though and 3 cocked up years going back

 

Probably more derivative traders than you think, this company has 8 accountants working on it. Www.accountantsfortraders.co.uk

 

Key words in bold.

I started trading options back in 1999 and at that time, I rang numerous accountancy firms and none had a clue what I was talking about.
Trading, the number of participants, and the world and societal perception of trading, has all changed so much in the last few years. 15 years ago, if I mentioned that I was a trader to someone, then there would be a look of surprise and even awe, followed by a blank expression with a look that said "I want to ask you a question, but I don't know what that question is". Nowadays, every man, woman, and neighbours cat can download an IG index app on their smartphone, put in £100 and call themselves a trader half an hour later. YouTube videos have turned many uni students into day-traders and scalpers.

In real life, I no longer tell people that I am a trader.

 

There were several thousand people on the Liffe floor many of whom were self employed in 1999.

 

So once you’ve paid corporation tax in your LTD company, if you want to take any more money out of the business you need to take it as income or as a dividend and pay the appropriate tax rate?
Can you allow the money in your account to build up over several years before drawing it?

 

You withdraw money from your LTD company as a salary or dividend before you pay corporation tax on it. Then you have to pay personal incomes tax on the salary/divis you took out, just like you would if you were employed by someone else.

Yes, for as many years or decades as you like. But it's better to withdraw some every year to make use of your annual allowances.

 

Yes to both, but it can be useful to make pension contributions from the LtdCo and it's possible to use certain options trading strategies tax-free within your SIPP.

 

Question! If one do option trading for spare time especially trading for own personal account say 10 per day (buy and sell) for the year, while working full time, then would it mean gains (or losses) would be liable to U.K. income tax, instead of capital gains? And in case of income tax, do we use turnover (all sells of options bought) and then offset expenses (purchases of options) right?