- Alex Gerko loses UK tax case, ordered to pay £22.5 million on deferred payouts from his former firm, GSA Capital.
- UK appeals court rules deferred payouts at GSA Capital are taxable income, not corporation tax, impacting Alex Gerko and traders.
Alex Gerko, the founder of algorithmic trading firm XTX Markets, has lost a legal battle against the UK tax authorities (HMRC) regarding the tax treatment of deferred compensation received during his tenure at GSA Capital, a high-frequency and quantitative trading firm.
A UK appeals court ruled that Gerko and other traders at GSA Capital should have paid income tax on their share of trading profits earned between 2010 and 2015, resulting in an estimated tax bill of £22.5 million (USD $29 million).
The dispute centered on a deferred payout plan at GSA Capital, which allocated profits to an internal investment unit before distributing them to traders over a three-year period. The court determined that these payouts should be classified as income subject to higher income tax rates, rather than corporation tax as argued by Gerko.
