As a day trader, you probably have a million things to do daily. The vast majority of day traders are unprofitable, so you probably have this pressure to do well and combat those statistics.
Why add the stress of dealing with your taxes when you already have so much on your plate?
To help you plan for the future, our accountants are here to answer any tax-related issues and supply you with the wealth creation and protection strategies you require.
Retail or proprietary day traders typically take short-term positions in various financial assets, including stocks, bonds, currencies (including virtual currency), commodities, futures, and options.
Trading can last from minutes to weeks (scalping) or even months (swing trading). Day traders typically want to buy assets at a low price and sell them at a higher price within a short period of time (for long positions; for short positions, the reverse is true).
Day traders buy low and sell high, just like every other business.
Financial transactions, however, are executed instantly, resulting in quick profits and losses. Nowadays, day trading has become more accessible through online training courses that teach how to trade financial assets.
Trading in financial assets also requires investing in equipment (e.g., hardware and software) and paying regular expenses, such as commissions, platform fees, data fees, interest on margin-based loans, and office costs.
If it is a business, its investments, expenses, commissions, loans, profits, or losses from day trading need to be reported and have tax implications to be sorted out.
The HMRC classifies trading as non-business activity. All trading profits are classified as passive income since they do not need active participation from the trader.
From the HMRC’s point of view, this assumes that people are investors and that their trading is done for the purpose of long-term capital accumulation (rather than paying for current liabilities).
As a result, unless a person meets the requirements for trader status, they will be treated the same as any other taxpayer in terms of tax purposes.
Trading income cannot be deducted from taxes in the same way that contributions to an IRA or pension fund may.
One potential benefit of being classified as a passive trader is that trading profits, being not really part of ordinary income, are exempt from self-employment taxes.
Following that point, employees are entitled to the same deductions as any other W-2 employee (generally limited to mortgage interest, property taxes, and charitable deductions). Most tax breaks are based on your AGI or adjusted gross income.
All trading-related costs are non-deductible since the HMRC does not recognise trading as a business activity.
Costs associated with things like schooling, a trading platform, accounting software, internet connection, computers, etc., may add up to a sizable sum for the average active trader.
The fact that trading losses cannot be deducted against trading gains is the primary source of tax liability for most traders.
We offer tax services for all kinds of tax issues to help you take care of your own tax business.
Business owners or business executive professionals often mix their personal and professional lives. We work with you and your family to provide tax services that help you reach your short-term and long-term goals.
Our tax experts will help you manage your money, protect your family’s wealth, and avoid paying taxes that you don’t have to.
It can be frustrating and confusing to undergo a tax audit or inspection, so if you’re not sure what’s going on, get help from a professional as soon as a tax probe starts.
Our professionals help organise payments for your respective HMRC contributions or aid with VAT, PAYE, self-assessment, or corporation tax issues with HMRC. Better yet, we can help you avoid ever having to deal with an HMRC tax inquiry in the first place.
Tax policies for businesses are complicated and constantly changing.
Tax planning is vital to lowering your company’s tax bill.
Our tax experts are well-trained, business-minded, and good at lowering tax costs, so you can be sure you’re in good hands.
Pearl Lemon Accountants offers a full range of corporate tax compliance services to ensure that your company is set up in the most tax-efficient way and that your company’s tax liability is kept to a minimum.
Whether you are an IT consultant, a business analyst, an architect, or a surveyor, it has never been easier to help businesses, whether at home or across the country.
You are the business when you are a sole trader and don’t have a business name. People who don’t know much about accounting may find it complex and time-consuming to keep track of their finances.
In today’s world of more rules and regulations, your books and records must be correct and up to date.
Research and Development (R&D) tax breaks in the UK are some of the world’s best and most profitable tax relief. A company’s tax bill can be lowered or even paid back in full by asking for government-backed relief.
But many qualified businesses don’t ask for help, either because they don’t know about it or because it looks too complicated or unsuitable for their business. We can help you file for that at Pearl Lemon Accountants.
If you want to see what else we have to offer, just click here.
As a day trader, you probably know how important it is to get your finances in order.
Accurate records must be kept, tax planning must be met, and tax returns must be filed–many things need to be done in the accounting area.
So much is to be done, and we highly recommend hiring a chartered accountant from us to give you a helping hand.
As part of the reporting process, traders (including day traders) must file form 8949 as part of their transactions. Expenses incurred when a person purchases or sells securities on their own behalf can also be reported on the Federal Schedule C.
The benefit of showing that you trade as a business is that all expenses can be included in your tax outgo, and a net loss can be carried forward if there is one after all these expenses have been accounted for. When you report net losses after balances for each list item are accounted for, you won’t have to pay taxes or perhaps get a reduced amount of tax.
Even though gains derived from the trading activity are also treated as ordinary income, this does not mean that day traders are going to have to pay a higher tax rate on their gains. Due to the nature of day trading, the gains derived from the trading activity are usually short-term capital gains, which do not lead to a higher tax rate.
When you allow us to keep track of your finances, you give yourself more time to do your work and please more clients.
It's a win-win situation for everyone.
Aside from that, you'll also gain financial stability because your assets and liabilities are managed well enough not to cause any trouble for you in the future.
So let our experts work for you, and you won't regret it even a bit.
Book a call today to get started.