Will Bitcoin Profits Mean A Bumper Year For HMRC?
You may be liable for Capital Gains Tax ...
POSTED BY HELEN BEAUMONT ON 18/01/2019 @ 8:00AM
Bitcoin hit the headlines last year with rapid growth, pushing the value of each coin closer and closer to £20,000. Many people cashed in their investments which means they now have a tax liability to pay by the end of January ...
Any gains from Bitcoin and other cryptocurrencies may be liable for Capital Gains Tax!
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Lots of people have been jumping on the Bitcoin bandwagon and now HMRC will tax profits on cryptocurrencies, publishing guidance on this late last year.
"Most casual investors will be covered by their Capital Gains Tax annual exemption!"
If you've made a gain of up to £11,300 on your bitcoin investment then you should be ok, but remember that HMRC still requires a tax return if the total amount sold was more than £45,200, which is four times the annual exemption.
But what if your gain is larger than annual exemption? Well, you'll be paying Capital Gains Tax at 10 or 20 percent, depending on if you're a higher rate taxpayer or not.
A cryptocurrency tax liability could be due if:
You're trading it for profit
Exchanging one form of cryptocurrency for another
Buying products or services using a form of cryptocurrency
Giving some of your cryptocurrency to another person
Some investors may be surprised by some of the bullet points I've listed. Remember that every transaction represents a disposal of an asset (even a crypto one) that needs to be reported to HMRC.
It is essential to seek professional advice when trying to calculate what you may or may not owe HMRC. These are complex transactions and are sometimes difficult to calculate the Sterling equivalents so if you're at all unsure of your tax position, then get advice.
Although the value of Bitcoin and other cryptocurrencies has fallen quite dramatically over the past year, you still need to account for any transactions you made!
If you'd like to find out more about Capital Gains Tax liabilities regarding Bitcoin and other cryptocurrencies then do give me a call on 01908 774323 or click here to ping me an email and let's see how I can help you.
Until next time ...
If you're looking to work with an expert tax advisor with a wide range of tax experience, do visit www.essendontax.co.uk to find out more about me and discover how I can help!
Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.
Tax Planning can make a considerable difference to your tax liability. Helen’s specialist knowledge in tax planning and experience ensures every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.
When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.