HMRC "Badges of Trade" or CGT.(reddit.com)

Hi all, ​I am seeking technical advice on HMRC's classification regarding crypto trading activity. I am currently employed full-time (£22k/year apprentice) and looking to understand if my strategy would likely be classified as an investment (Capital Gains Tax) or a financial trade (Income Tax) For reference, i programmed this algorithm myself and have not distributed or sold it with no plans to do so, it runs entirely on my computer at home and the script trades a single pair on the Kraken Exchange through their api by creating a grid of buy and sell limit orders around the current price. The ​automation part is that the algorithm is on 24/7 and is set to modify the grid layout hourly by fractional amounts based on price movement. I know about the £3000 CGT allowance, and if the algorithm continues on its current path, it will exceed this allowance, so i want to prepare asap. I turned the code on after the tax year ended, so there's no need to worry about last tax year. After final tests, it has now completed 1 month of running non-stop. ​This is a side-activity, not my primary income. The strategy is simple and could theoretically be executed by hand quite easily, I automated the process as i have experience through my apprenticeship, and it saves me time. In case the activity is relevant, the algorithm does not have a timeframe or specific profit margin on selling the tokens it buys, i may take days or weeks, or it may take minutes or even seconds. ​My Questions: ​HMRC states that "only in exceptional circumstances" would an individual be considered a financial trader. Does the use of an automated algorithm, by its very nature of being "systematic" and "organized," push this into that "exceptional" category? How would I confirm what this is classed as, from what ive seens its a bit of a grey cloud where if they decide youre a financial trader you will pay penalties, interest and be required to pay up the rest. Can i reach out, describe the situation, and get a concrete response? Are there any benefits to being a financial trader over paying cgt? From what I can see, it makes you quite worse off. If i am a financial trader, are there any considerations in reducing my tax liability? ​Are there any precedents or experiences with HMRC classifying high-frequency retail crypto-bot users as traders? ​Beyond the "Badges of Trade" framework, are there specific "red flags" I should avoid to ensure this remains categorized as a personal investment activity, as that means I can use the more tax efficient approach. ​I am looking for community input on whether this setup is defensible as a personal investment or if I should preemptively assume a "trader" tax classification. If i have missed out on any important details, let me know, and I'll add them in right away. Thank you so much for your help. It's quite a while until the next tax year ends, so im looking for community advice and experiences before moving onto potentially discussing this with a professional. submitted by /u/Professional_Ad_4267 [link] [Kommentare]