Cryptocurrency

[VirtualMonkey]

And here comes Hector for his slice of the pie.....

Bitcoin - the Revenue comes calling - BBC News

This is great. That article points to a tax clarification that we've been asking about recently and that my accountant could not find an answer to. The taxes are due when funds are converted back to FIAT (if my understanding of the term 'functional currency' is correct).
As someone who had every intention of declaring profits during SA then this is very encouraging as it may stop the thought processes that cryptos are just for thieves/extortionists and money launderers.
It also states that losses can be offset against tax as well.

[DaveB]

This is great. That article points to a tax clarification that we've been asking about recently and that my accountant could not find an answer to. The taxes are due when funds are converted back to FIAT (if my understanding of the term 'functional currency' is correct).
As someone who had every intention of declaring profits during SA then this is very encouraging as it may stop the thought processes that cryptos are just for thieves/extortionists and money launderers.
It also states that losses can be offset against tax as well.

Not how I read it.

This will apply to any profits, once you hit the £11,300 CGT threshold, not just if they are converted into a standard currency but if they are used to buy other crypto-currencies such as Ethereum or to invest in initial coin offerings (ICOs).

I read that as Hector wanting his slice whatever you hold it in, FIAT or otherwise. If you bought coins of any flavour and their value has increased by more than £11,300 then CGT applies.

[VirtualMonkey]

Not how I read it.



I read that as Hector wanting his slice whatever you hold it in, FIAT or otherwise. If you bought coins of any flavour and their value has increased by more than £11,300 then CGT applies.

That is the reporter's view. The publication he links to does not state that as far as I can tell. I could be wrong though

[Hobosapien]

My reaction from last 3 posts:

Oh well, I've got until Jan 2019 to worry about CGT (if I get to the moon ) on the next self assessment as I had no skin in the game prior to April 2017.

[TheGreenBastard]

This is great. That article points to a tax clarification that we've been asking about recently and that my accountant could not find an answer to. The taxes are due when funds are converted back to FIAT (if my understanding of the term 'functional currency' is correct).
As someone who had every intention of declaring profits during SA then this is very encouraging as it may stop the thought processes that cryptos are just for thieves/extortionists and money launderers.
It also states that losses can be offset against tax as well.

Are we reading the same article?

This will apply to any profits, once you hit the £11,300 CGT threshold, not just if they are converted into a standard currency but if they are used to buy other crypto-currencies such as Ethereum or to invest in initial coin offerings (ICOs).

Same law in Germany even tho scooterscot doesn't believe it; you buy ETH with BTC or any other combination and it's a liquidation event.

Luckily I'm only getting bent over for CGT in the UK vs. my mate in Germany that's encroaching 40%. Ouch...

[Jog On]

So can we offset losses as well?

[TheGreenBastard]

So can we offset losses as well?

Yes.

[VirtualMonkey]

Are we reading the same article?



Same law in Germany even tho scooterscot doesn't believe it; you buy ETH with BTC or any other combination and it's a liquidation event.

Luckily I'm only getting bent over for CGT in the UK vs. my mate in Germany that's encroaching 40%. Ouch...

Yes we are. I'm clicking through that to the HMRC website though and looking at that
https://www.gov.uk/government/public...yptocurrencies

[Jog On]

Yes.

The HMRC policy paper (linked to in the BBC article) hasn't changed since 2014 - are we to assume that this is still the policy?

Whether any profit or gain is chargeable or any loss is allowable will be looked at on a case-by-case basis taking into account the specific facts. Each case will be considered on the basis of its own individual facts and circumstances. The relevant legislation and case law will be applied to determine the correct tax treatment. Therefore, depending on the facts, a transaction may be so highly speculative that it is not taxable or any losses relievable.. For example gambling or betting wins are not taxable and gambling losses cannot be offset against other taxable profits.

For businesses which accept payment for goods or services in Bitcoin there is no change to when revenue is recognised or how taxable profits are calculated.

• CT - the profits or losses on exchange movements between currencies are taxable. For the tax treatment of virtual currencies, the general rules on foreign exchange and loan relationships apply. We have not at this stage identified any need to consider bespoke rules. For companies, exchange movements are determined between the company’s functional currency (usually the currency in which the accounts are prepared) and the other currency in question. If there is an exchange rate between Bitcoin and the functional currency then this analysis applies. Therefore no special tax rules for Bitcoin transactions are required. The profits and losses of a company entering into transactions involving Bitcoin would be reflected in accounts and taxable under normal CT rules
  
• IT - the profits and losses of a non-incorporated business on Bitcoin transactions must be reflected in their accounts and will be taxable on normal IT rules
  
• Chargeable gains: CT and CGT - if a profit or loss on a currency contract is not within trading profits or otherwise within the loan relationship rules, it would normally be taxable as a chargeable gain or allowable as a loss for CT or CGT purposes. Gains and losses incurred on Bitcoin or other cryptocurrencies are chargeable or allowable for CGT if they accrue to an individual or, for CT on chargeable gains if they accrue to a company.

https://www.gov.uk/government/public...yptocurrencies

So there's no change in what we already knew except because of the 2017 bull run Hector will be looking to cash in on a 'case by case' basis and the BBC are spreading the FUD.

My tax return will be complicated next year - think I'll export my Bittrex and Uphold logs, attach them to my return and let them decide.

[SunnyInHades]

And here comes Hector for his slice of the pie.....

Bitcoin - the Revenue comes calling - BBC News

I see nothing official in that article - because it's SA submission day for many and a few have made Crypto coin this year, Rory Cellan-Jones is re-linking to the 2014 HMRC guidelines and fleshing it out with his own guesses/hunches. The 'old' 2014 Bitcoin guidelines he links to in today's article (published 3 March 2014)...

https://www.gov.uk/government/public...yptocurrencies

state...

"As with any other activity, whether the treatment of income received from, and charges made in connection with, activities involving Bitcoin and other similar cryptocurrencies will be subject to CT, IT or CGT depends on the activities and the parties involved. Whether any profit or gain is chargeable or any loss is allowable will be looked at on a case-by-case basis taking into account the specific facts. Each case will be considered on the basis of its own individual facts and circumstances. The relevant legislation and case law will be applied to determine the correct tax treatment. Therefore, depending on the facts, a transaction may be so highly speculative that it is not taxable or any losses relievable.. For example gambling or betting wins are not taxable and gambling losses cannot be offset against other taxable profits."

and a related article from 10 days ago in the DailyExpress, Sun, Jan 21, 2018..

"Bitcoin tax loophole could save cryptocurrency investors millions as it leaves HMRC short
MILLIONS of pounds could be lost by the Treasury after a tax loophole was revealed and cryptocurrency investors are expected to take full advantage of the gap, experts warn. The massive loophole allows investors, who could have made millions when bitcoin hit its $19,343 (£14,000) high in December, to declare their returns as gambling winnings. The current guidelines have not been updated since 2014"

No crypto investment gains baby - I don't invest, I gamble !