Billionaire Alex Gerko Lost a Dispute Over Taxes on Traders in the UK
One of the UK's largest taxpayers warned that the tax authorities' approach to traders would lead to "widespread double taxation"
The UK Supreme Court (pictured) ordered Gerko traders to pay tax on their profits at a higher rate / Photo: Claudio Divizia / Shutterstock.com
Billionaire Alex Gerko lost his appeal in the UK Supreme Court in a case involving the taxation of traders’ profits, Bloomberg reported. Gerko had previously warned that the tax authorities’ approach would lead to “widespread double taxation.”
Details
The UK Supreme Court ruled that Gerko and the traders on his team must pay income tax on the profits they earned at the London-based hedge fund GSA Capital between 2010 and 2015. Gerkow worked as a trader at GSA Capital before he and his team spun off to form the independent company XTX Markets in 2015.
The total amount of tax claims is approximately £22.5 million (approximately $30.2 million).
The dispute centered on the profit-sharing scheme for trading. Under the company’s scheme, a significant portion of the profits was allocated to an internal investment division and then distributed to traders and developers over a three-year period. The payment scheme provided them with a share of profits of up to 50% over three years, according to the Financial Times.
Initially, the company paid corporate income tax on its profits. However, Her Majesty’s Revenue and Customs (HMRC) demanded that the payments to traders be subject to additional income tax at a higher rate. In 2024, a lower court agreed with this position.
Gerkow stated that this approach could lead to “widespread double taxation” and have far-reaching consequences for the entire financial industry. XTX challenged this decision in the Supreme Court but did not find support there.
On Wednesday, the Supreme Court ruled that traders’ profits constitute “income subject to income tax.” The court drew an analogy with a situation in which a company first pays tax on its profits, and then shareholders pay tax on dividends received from those same profits.
The UK Tax Authority welcomed the court's decision. "We intend to continue pursuing those who evade paying their fair share of taxes," the agency stated.
XTX declined to comment. Gerko wrote on LinkedIn that it was “quite astonishing” for HMRC to boast about an effective tax rate of 70%.
Context
Alex Gerko was born in Moscow and earned a Ph.D. in mathematics from Moscow State University. In 2006, he moved to the United Kingdom. Gerk started out as a trader at Deutsche Bank, then moved to the hedge fund GSA Capital, where he headed the foreign exchange trading desk, and in 2015 he founded XTX. Gerk holds British citizenship and has renounced his Russian citizenship.
According to Forbes, Gerko's net worth has grown by 66% over the past year—to $12 billion—earning him seventh place on the list of British billionaires.
Gerkho is one of the UK’s largest individual taxpayers. According to estimates by The Sunday Times, he paid £665 million ($900 million) in taxes in 2024 and £202 million ($270 million) last year.
This article was AI-translated and verified by a human editor
