Quitting day job to trade crypto - need advice as to what path to take from here

[JackAlabama]

I think your are planning this totally wrong.

You don't optimize your taxes before making money. Moving from UK right now is the worst thinking ever. No real job, different country you know nothing about, what could go wrong!

Stay in UK till you have stable source of income, and pay the damn 20% taxes. UK is great when it comes to taxes. When you are paying 50K in taxes or something, you can start looking for other opportunities..

Second that. Go to a place which is free and you actually have some opportunity to make money.

 

[khinkali]

I've tried to seek clarity on this myself however not had much luck.

I'm not sure that HMRC are super-strict on this. Income tax can be higher than cap gains, but if they class your trading as self employment then you can make lots of deductions. I think the real cost is accountancy cost, time lost to bureaucracy and lack of sleep.

BIM56830 - Financial traders - instruments and shares: key areas to explore in meetings - HMRC internal manual - GOV.UK

www.gov.uk

BIM20200 - Meaning of trade: badges of trade: contents - HMRC internal manual - GOV.UK

www.gov.uk

Ignoring your intent for a minute, what kind of timescales are you talking? Buy coins you like and HODL them for months or more? Or 00s or 000s of small trades per day?

 

[BeardedNomad]

Ignoring your intent for a minute, what kind of timescales are you talking? Buy coins you like and HODL them for months or more? Or 00s or 000s of small trades per day?

I trade Futures via Binance and make a couple hundred trades each day, this will increase over time with compounding returns.

I have been using Koinly.io to pull my trading data via API and give me a rough idea of totals/gains etc as I go. My plan was to use TaxScouts.com to review this data fully and file at the end of the year tax year, however I do not know if they will "offer up" advice to maximise my taxes or they do the minimum for the fee.

I have never used an accountant before and whilst search/reviewing for best advice, the word "avoidance" and "evasion" seem to be viewed as synonymous with one another. Just to clarify, I do not wish to evade, however my morals have no issue with avoidance and in turn minimising my taxes as much as legally possible. I have paid my taxes for almost thirty years, never been unemployed and never asked anything from anyone, now its time I start looking out for myself. I am more than happy to squeeze every last penny that I can out of the tax man.

 

[glengoolie]

this topic is about crypto yet you talk about futures? that is completely different ballgame(more/better options).

 

[BeardedNomad]

this topic is about crypto yet you talk about futures? that is completely different ballgame(more/better options).

I'm uncertain that I follow, crypto can be traded via Margin or Futures on Binance.

 

[glengoolie]

ok, i just read up on it(i ignored it altogether). it's all legal and it is taxed under capital gains tax as any other security. in that case you are seeking the same thing as i do so maybe i will direct you here Stock market investors, where you at?

 

[BeardedNomad]

ok, i just read up on it(i ignored it altogether). it's all legal and it is taxed under capital gains tax as any other security. in that case you are seeking the same thing as i do so maybe i will direct you here Stock market investors, where you at?

There's a lot of good information there, you have clearly done your homework. I'll read through it a couple of times and digest it. Thanks.

 

[khinkali]

the word "avoidance" and "evasion" seem to be viewed as synonymous with one another

Avoidance is where you buy the maximum amount of booze or cigarettes in the duty free shop, to legally reduce your tax. Evasion is where you smuggle some additional product illegally. The difference is just whether you used the rules, or broke them.

Given that you make 00s of trades per day and will be leaving your job to do this full time, I think the statement that "it is taxed under capital gains" is dangerous.

Depending on which type of futures, you should look into whether it could be untaxed as gambling, rather than trade or investment (three different tax approaches, for similar transactions). I think you need a specialist UK accountant or tax lawyer. Assuming you started this before April 6, you can use your 2020-2021 tax year to find out where you stand.

I'm a little confused though. FCA banned the sale of CFDs, options and futures to UK retail customers from 6 January 2021.

 

[Kol019201]

I am a UK resident since birth and have started trading in crypto over the last few months.

I know this is a topic about saving taxes.
But be careful, you only traded in a crypto bull market, trading in a bear market is completely different.
So just put some money away for bad days when crypto is going down badly, thats all.

 

[BeardedNomad]

I'm a little confused though. FCA banned the sale of CFDs, options and futures to UK retail customers from 6 January 2021.

You're right, it came into effect a few months back, but as far as I understand due to Binance being located in Malta, it does not apply to them and as long as tax is paid, then the UK won't intervene. Binance did close down their new "Binance Jersey" offering, which many believe was to ensure the UK could not compel them to block Futures etc.

I know this is a topic about saving taxes.
But be careful, you only traded in a crypto bull market, trading in a bear market is completely different.
So just put some money away for bad days when crypto is going down badly, thats all.

Noted and thank you for the advice, it is appreciated.

 

[NeedAnExit]

Few things:

1. I strongly second the "wait until you are profitable long-term before giving up the day job" advice.

2. AIUI derivatives (CFDs etc) are still available to UK customers so long as they register as a "professional". IG Index are eager for me to do this and their site keeps asking me to...

3. Everywhere has an Expats group on Facebook and they are very good for finding contacts, seeing what the day-to-day hassles people have there are, getting a little bit of a feel for the place.

There is definitely a "crypto tax exile" community in Malta (Adam Back, for one!). Property prices there, if you want something decent, might be a bit of a shock.

It's worth having a look at how different places have responded to Covid as this can seriously impact quality of life and is a useful sign for how knee-jerk brutal they're likely to be in future! UK imprisoned everyone for months; Malta has an outdoor mask mandate, which is asinine but better than house arrest, for example.

 

[isyet]

Hi,

I am a UK resident since birth and have started trading in crypto over the last few months. Shortly, this will be my only source of income as I have started the process to finish my day job.

As I understand it, profits from crypto trading will be taxed as Capital Gains Tax, in the region of 10-20% dependant on amount. As I am making a major lifestyle change with quitting my job and that I do not have anything to keep me in the UK, I want to ask for advice/suggestions as to my next step.

Ultimately I want to reduce my tax responsibilities and overall expenditure as much as possible. I am happy to move abroad, setup a company etc to assist with these goals but I do not have the faintest idea of where to begin. I thought best to ask here before I start down the wrong path.

I have no criminal record and nothing to prevent me from moving.

Hopefully this is enough information to get the conversation started.

Many thanks.

I wouldn't recommend quitting your job for crypto trading.
My suggestion to you: Buy BTC with the money you have and will not need you for at least 10 years. Do not follow BTC prices in 10 years. So forget your cryptocurrency. Begin BTC price tracking 10 years later. Sell BTC at the most profitable time for you.
I followed this plan and multiplied my money 25 times.