UK Tax with Bitcoin


#1

Hey,

Quick question - How does tax work with bitcoin if you spend it as bitcoin instead of fiat?

As far as I’m aware, say I make a million through bitcoin and I want to bring that back into fiat, I would have to pay tax on that (roughly 28%?).

However, what if I kept that money in Bitcoin, and I bought, for example, a house and a car with using bitcoin, then would I still have to pay tax on that? Is there any way they can track Bitcoin to know I was spending it?

I don’t plan on doing anything illegal, but I don’t know how much of fiat regulations bleeds over into crypto.

Cheers.


About the Law & Tax category
#2

Well it’s fairly uncharted territory isn’t it? Considering the BTC to Sterling rate changes so much, how does one crack that little nut? I am due a skype meeting with my accountant soon (living in France but liable for tax in the UK currently) so I will ask her a few questions and report back. It’s uncharted territory so who really knows…
Personally I am not planning on cashing out for a long time and with my TenX card I am able to spend some of the profits should I want to. It would be incredibly easy to avoid taxation of crypto proceeds and ultimately I think it’s just down to personal responsibility. I’ve got a socialist heart so I would want to pay my share but how would one even go about calculating that?


#3

Anyway if you make a million you would have to pay an awful lot more tax than 28% - you’d surely be looking at 45% for most of it…


#4

The tax’s are fixed regardless of the amount.


#5

Yes of course - we’re talking cap gains


#6

It’s taxable as capital gains as soon as you ‘dispose of’ that share is my understanding which would include using that share to purchase a vacuum cleaner from a Currys Superstore with your TenX card.

You get up to £11300 tax free on capital gains. And then you pay 10% on anything over that but within your income tax bracket.

Example

Your taxable income (your income minus your Personal Allowance and any Income Tax reliefs) is £20,000 and your taxable gains are £12,300. Your gains aren’t from residential property.

First, deduct the tax-free allowance from your taxable gain. For the 2017 to 2018 tax year the allowance is £11,300, which leaves £1,000 to pay tax on.

Add this to your taxable income. Because the combined amount of £21,000 is less than £33,500 (the basic rate band for the 2017 to 2018 tax year), you pay Capital Gains Tax at 10%.

This means you’ll pay £100 in Capital Gains Tax.

From https://www.gov.uk/capital-gains-tax

If you dispose of anything with a TenX card or equivalent, that would have to be added to your calculations as a gain less initial cost of the spent gain.

A right pain in the arse and likely very difficult to track…but no one is advising anyone to not pursue the matter to the absolute letter of the law.We all love paying taxes. The more the better. I don’t think a great deal of it is utterly wasted and essentially stolen by inefficiency, politicians, and bureaucrats.


Cryptos & UK Tax Advice Professional Sought - Anyone Have a Contact?
#7

Crypto is Tax Exempt in the UK…wheeeeeee!!! :slight_smile:


#8

https://www.gov.uk/government/publications/revenue-and-customs-brief-9-2014-bitcoin-and-other-cryptocurrencies/revenue-and-customs-brief-9-2014-bitcoin-and-other-cryptocurrencies

In the U.K you are obliged to pay tax on gains you make from trading cryptographic currency in the same way you pay CGT trading tradition stocks.

Technically, you create a taxable event each time you make a trade.

You have an allowance of gains you are allowed to make before tax is due and if you’re working then the chances are you already have used that allowance.

If you spend your profits and don’t make a provision for this and the tax man comes knocking then you could find yourself in a sticky situation.


#9

I wonder how they’ll track transactions done with privacy products such as Monero?


#10

I love that Currys Superstore got a mention in The Bitcoin Pub!


#11

Yes, that’s interesting. Also wonder what happens if you accidentally lose your coin or send it to an unknown address by accident.


#12

Yep, good point.

I’ve tracked all my purchases, but I haven’t tracked all my transactions, or the transaction fee’s.


#13

If you log in to your exchange you can view your previous order history. From there you can usually export all of that to a CSV file that has everything Mr.Tax-Man needs to plunder your hard earned gains :wink:

I’d recommend doing this quite often because if an exchange goes down it will be hard to recover.


#14

Thanks for your post! We’ll be moving this to category Bitcoin. Please make sure to read the rules of each category so you get it in the right place. We want to make sure people get your message and are able to respond quickly!


#15

Maybe country-specific (UK) or a (new?) tax regulations sub-forum would be better?


#16

This is where the exposure element of something that circumnavigates HMRC, IRS or the equivalent of your jurisdiction and tax system, gains traction and raises questions, concerns and coercive action so as to demand conformity to such laws.

The issue is that litigation and law is not always contemporaneous, and it comes down to ethical practice and careful auditing and storing of financial transaction surround crypto-currency. It is an oxymoron for something which is de-centralised and free from institutional discrimination to then become subject of the ethos and underpinning framework of what we are all interested in.

I suppose the question at hand, is the revenue and turnover of such transactions, especially when withdrawing into fiat currency. This value will greatly fluctuate between each individual, their intention, profit/loss, internal policies of any bank and investigation into erratic input and output of ‘money’.

I guess the point is; does one obfuscate their ‘earnings’ so as to avoid such tax demands, which some could interpret as dishonest, but one could argue as, the very reasoning for engaging in such practice, currency, hobbies and passion for something that realistically, gained the attention of many for the reasons we are all raising.

We are not meant to earn capital gains in this unprecedented level since gold


#17

I’m currently looking to see if we have enough interest. Great idea!


#18

Yup - we’re a tax free haven (for now!)
Make as much money as you like


#19

you sure??? :doge::doge::doge::doge:


#20

https://www.gov.uk/government/publications/revenue-and-customs-brief-9-2014-bitcoin-and-other-cryptocurrencies