On shares and taxation

If you still keep your first job then I think there is virtually no danger of the income being subject to income tax. If trading was your main source of income it would become a possiblity (though not necessarily an undesirable one depending on how much you make).

I think you'd need expert advice - a limited company might increase costs because of NI and so forth - also there might be special rules for investment companies.

Thom

Why would it be more "efficient" to have a limited company? In what way would it be efficient?

I dunno. That's what I was asking! :-)

No seriously, I have no idea if this is true, but in my case I thought it might be more convenient at the least. Since I trade US stocks mainly, there is the hassle of having to calculate the profit taking into account the exchange rate. At least this way the only time I would have to calculate the exchange is when I get a dividend from the LLC.

There is also the advantage of being able to "time" the taxation. I wouldn't be taxed whenever I sell shares, but only when I get a dividend which would be more convenient if I ever make a living out of it.

But you'd still have to do the same calculations in the limited company and you wouldn't get exemptions.

Well not really and that is were it is a cunning plan. Since it is an American LLC, it wouldn't have to be reported to the Inland Revenue, only the money I get from the dividends. The exemptions are nice, but when I will be dealing in millions, £7,000 won't matter all that much. ;-)

Sorry I missed the american company bit but presumable you would still have to do the accounting in the US company.

Well, that's were it gets even better. According to what I've read, a Delaware LLC can act as a passthrough if there is only one owner as far as taxes are concerned and since I am not based in the US, I wouldn't be taxed on capital gains. At least that's the theory.

Are you allowed to be sole owner of a Delaware company if you are not a US citizen? And if you were a US citizen, you'd be taxed no matter where you're actually based, wouldn't you?

Yes, you can be a sole owner of a Delaware LLC even if you are a foreigner. I think it might be the case in other States too. And you are right about about the US Citizens bit being taxed wherever they were, although there are tax treaties between countries that avoid double taxation.

Yes, but double taxation treaties won't help you escape single taxation.

In this case yes because as long as the profits are kept within the company, no taxation would take place. I get the impression that you think I am a US citizen which I am not. I am only subject to UK taxes. Of course it would be only fair for me to pay capital gains tax on the dividends. But this is all hypthetical of course because right now I have not even passed the CG Allowance threshold! :-)

Paying capital gains tax on dividends?

Oh dear I'm seeing Capital Gain taxes everywhere.

Fair enough, but this'll be without help from double taxation rules.

Heavens, no. I don't know you well enough to insult you so deeply. I was speaking hypothetically.

Dividends are taxed as income, not as gains.

Look at it this way. The more tax you pay, the more money you must be making. That has got to be a good thing, so don't worry about paying too much tax.