UK Crypto Tax

[BluKoo]

Obviously the main aim of the game for everyone here is to buy low, sell high and walk away with full pockets.

I for one am a little clueless about how crypto profits are treated in the UK.

I did hear one person suggest that currently they are treated as gambling wins, and therefore tax free (which would be b-e-a-utiful) however I do have a feeling they don't fall into that gategory and will be subject to capital gains tax.

Does anyone happen to have any first hand experience in this matter? Or maybe know of any handy resources.

I will most likely speak to my financial adviser when the time comes, but it never hurts to be ahead of the game. 

[jamie998]

I don't have any references to hand but from what I have read crypto will attract 20% capital gains tax at the minute.  Better than some countries, worse than others - however when I cash out it will hopefully be for a sum where I ain't too bothered about paying 20% tax.

[CT99]

Good evening from Edinburgh. I think at the moment it's 20% capital gains tax. I also heard the gambling gains suggestion but don't think that is the case (sadly)

[BluKoo]

9 minutes ago, jamie998 said:

I don't have any references to hand but from what I have read crypto will attract 20% capital gains tax at the minute.  Better than some countries, worse than others - however when I cash out it will hopefully be for a sum where I ain't too bothered about paying 20% tax.

 

1 minute ago, CT99 said:

Good evening from Edinburgh. I think at the moment it's 20% capital gains tax. I also heard the gambling gains suggestion but don't think that is the case (sadly)

Hi guys, thanks for joining and contributing.

I am actually looking forward to the day I have to pay the capital gains tax and I hope its a bloody big figure as that means the figure I'm getting to keep is even larger 

When I first spoke to my financial adviser, she rather ignorantly laughed and said, "if you have to pay capital gains tax, I'll come and work for you".
She wasn't and probably isn't too clued up on crypto and likened it to a ponsi scheme.

I hope one day I can make her feel very silly and jealous indeed  
 

[Arized]

Hello, also from the Edinburgh area! Someone should start a meetup for all the closeted XRP'ers here... assuming we don't get robbed.

From what I have read in the past on https://www.reddit.com/r/BitcoinUK/ I owe CGT on my crypto-to-crypto trading while it was near its peak.
Unfortunately, I didn't really accomplish anything other than owing taxes. 

Edited April 17, 2018 by Arized

[KandleSand]

Hello there! I haven't come across anything concrete yet, however I'm preparing to give 20% CGT when I sell. Not sure how things will pan out. If XRP does do astronomical things, could a person just sell X amount each year (assuming xrp price is stable) and take a 'steady' income? or is it better just to take a one time hit of tax and be over and done with it? I guess my thoughts are less to do with tax and more do with sell point.

 

[XRPHornets]

If, in the future,  you do have a large enough sum of XRP that you can live off, the best way to proceed is to take your capital gains as income, use your 9k capital gains tax free threshold, and then declare the rest as capital gains at 20% .

 

For example, you take 100k per annum as income.

•11.7 k as personal income at 0% tax

• 11.3k as CGT tax free allowance

• 77k as CGT at 20%

 

....which means on 100k annual earnings you ll pay 15.4k in tax. (ie 0.2 x 77k)

 

This means you can have a very tidy income of 100k per annum paying only approx 15%, whilst the remaining XRP continue to generate capital wealth.

Im told you can register in Isle of Mann etc but not sure how I feel about the morality of that. Only paying 15% tax on a decent income is fine by me.

Edited April 17, 2018 by XRPHornets

[xrp-pat]

I've read it's also capital gains tax. Now in some circumstances that can be reduced, a few years back I sold a business and reduced my capital gains to 11% by using entrepreneurs relief. Not sure if that would apply to crypto though! But there may be other routes, need advice from an accountant, I no longer have one. 

[XRPHornets]

4 minutes ago, Arized said:

Hello, also from the Edinburgh area! Someone should start a meetup for all the closeted XRP'ers here... assuming we don't get robbed.

From what I have read in the past on https://www.reddit.com/r/BitcoinUK/ I owe CGT on my crypto-to-crypto trading while it was near its peak.
Unfortunately, I didn't really accomplish anything other than owing taxes. 

Tax on trading is US based only. Im pretty sure HMRC will only tax you once you realise profits back to GBP. And of course you can subtract your initial investment from profits to reduce CGT bill.

By this I mean that in the US, you will get taxed on every trade you make even is it is from one crypto to another. Some people have ended up oweing more than they earned if they have day traded, Im told.

Edited April 17, 2018 by XRPHornets

[BluKoo]

I was speaking to a guy about property development and he said if you own and live in the property for 2 years, you are not subject to CGT.
I wonder if that rule might apply to crypto too?

Buy on Dec 1st 2017, and don't sell until after Dec 1st 2019 and maybe it's exempt or maybe a reduced rate.

[Flintstone]

I’ve had this saved in a tab for a while now. This is a quote from here: https://bitcointalk.org/index.php?topic=2598830.0

 

This is my understanding of it.

When selling your bitcoins in the UK you pay capital gains tax on the profit.  If you're a basic rate tax payer (i.e. you earn less than £45,000 per year), then you pay 10% CGT.

Example: 

You buy 10 Bitcoins for £5 each many years ago. 

You then sell 3 of these Bitcoins for £45,000.

You then deduct the cost of the Bitcoins £45,000 - £15 = £44985

You're allowed £11,300 tax free, so 44985 - £11,300 = £33685

You pay 10% tax on £33685 = £3368.50 tax.

Theoretically, if you had a partner who you trust and also is a basic rate tax payer, then they could also sell the above amount and pay 10% CGT.

In total you could sell around £90,000 per year between you both and pay 10% tax.  If you're patient enough do this every year, rather than selling all at once.

I'm happy to be corrected if anyone now differently.

[Spunkmeyer]

Yo  yo  yo  b itches

Sorry couldn't resist. 

 

[Flintstone]

I looked in to the above and checked it against the .gov website and it seems correct.

Isle of man etc. You have to be a resident for 5 years I think, before getting the cgt benefits.

[XRPHornets]

3 minutes ago, BluKoo said:

I was speaking to a guy about property development and he said if you own and live in the property for 2 years, you are not subject to CGT.
I wonder if that rule might apply to crypto too?

Buy on Dec 1st 2017, and don't sell until after Dec 1st 2019 and maybe it's exempt or maybe a reduced rate.

Thats not quite right. I know a little about it but no more, at least as a property developer, but not tax expert.

If you live in a house as primary residence you are not subject to any tax on increases on the property price, even if you develop it. However second properties are subject to CGT rules that are higher than shares, bonds, cryptos etc.

The tax system is pretty biased imo. If you work hard and earn over 50k you are taxed at 40%, but if you are born rich and earn from a share portfolio whilst sitting on yo *** smoking opium and watching MTV, you only get taxed at 20% CGT.

 

[XRPHornets]

1 hour ago, Flintstone said:

I’ve had this saved in a tab for a while now. This is a quote from here: https://bitcointalk.org/index.php?topic=2598830.0

 

This is my understanding of it.

When selling your bitcoins in the UK you pay capital gains tax on the profit.  If you're a basic rate tax payer (i.e. you earn less than £45,000 per year), then you pay 10% CGT.

Example: 

You buy 10 Bitcoins for £5 each many years ago. 

You then sell 3 of these Bitcoins for £45,000.

You then deduct the cost of the Bitcoins £45,000 - £15 = £44985

You're allowed £11,300 tax free, so 44985 - £11,300 = £33685

You pay 10% tax on £33685 = £3368.50 tax.

Theoretically, if you had a partner who you trust and also is a basic rate tax payer, then they could also sell the above amount and pay 10% CGT.

In total you could sell around £90,000 per year between you both and pay 10% tax.  If you're patient enough do this every year, rather than selling all at once.

I'm happy to be corrected if anyone now differently.

Correct up until  the point when your income from investing, goes higher than the 20% income tax bracket ( which is 46k) then you revert to the 20% CGT rate that everyone is subject to.

Edited April 17, 2018 by XRPHornets