Prop trading and tax: general information

If you receive payouts from a prop firm, you may have to pay tax on them. This page explains, in general terms only, why that question matters and where to find official information. It does not tell you how your payouts will be taxed, what you owe or what you should do.

Why tax treatment varies

How prop firm payouts are treated for tax depends on where you live, how the arrangement with the firm is set up, your other income and your wider circumstances. Two traders receiving the same payout from the same firm can be in different positions. Only a qualified tax adviser who knows your situation can tell you how the rules apply to you.

Payouts may reach you without any tax taken off. Whether, when and how you need to report and pay tax is something to check with an adviser or with your country's tax authority.

United States

The Internal Revenue Service (IRS) publishes official information for individuals and the self-employed at irs.gov. Some firms may send US tax forms and others may not; whether or not you receive one, how your payouts are treated is a question for a qualified US tax professional, such as a CPA or enrolled agent.

United Kingdom

HM Revenue & Customs (HMRC) publishes official information on GOV.UK, including on Self Assessment tax returns and working for yourself. Whether and how prop firm payouts are taxable for you is a question for a qualified UK tax adviser or accountant.

Other countries

Rules elsewhere differ. Your country's tax authority is the official source, and a local tax adviser can explain how its rules apply to you.

Questions you may want to ask a tax adviser

• How are payouts from a prop firm treated where I live?
• Do I need to register with the tax authority or file a return?
• Which records should I keep, and for how long?
• Can any costs, such as challenge fees, be taken into account?
• Does it matter that the firm is based in another country?

These are examples of questions only. We do not suggest any answers.