Beware CGT!!! UK tax on BTC even when you think it doesn't apply to you!!!
UK specific post - although the essence might be relevant for other markets.
I recently became aware that HMRC views cryptocurrencies as a taxable item, that mainly attracts Capital Gains Tax. This may be commonly known on here, but I had done some prior research before starting to stack and was fairly confident in my mind that it was treated similarly to a currency & therefore that, when it's your personal money, you wouldn't get taxed on it. So a slight bummer and better research needed - but glad I'm still trying to learn and read.
With this new found knowledge, I was still fairly satisfied with the impact on me - as I would only be liable for CGT when I disposed of the coins. My plan is to hold until it becomes a currency - so this is not really an issue. At worse it's a 20% tax on something that avoids holding a mass inflation of GBP in this time.
Reading into the HMRC paper though, they are counting a disposal of BTC (for example) not only when you sell for FIAT and 'realise the gains', but also if you buy another cryptocurrency with your BTC.
I hold an equal amount of another coin and have grown these on a 50/50 basis (I view that it is likely to be the $ to BTC's gold position in the market and so both sides could end up being good calls (or both bad :shrug:)). The second coin I can't buy in GBP using the platform I purchase through, so have merrily been buying BTC and immediately using the BTC/Othercoin market to trade it across. Slightly more fees, than buying direct, but for my own sanity, I was happy with this.
Now in the normal world, this shouldn't be an issue as '1' BTC held for a short time then used to purchase another coin of the same FIAT value hasn't gained any value - so no CGT would be recognised.
BUT... HMRC are pooling the value of BTC you hold. So the outcome from dollar averaging. This means that although I buy '1' BTC at a cost of £8k to swap it for '1' other coin, if my dollar cost average position is £6k, then I am realising £2k ...
Transactions stuck and not confirming?We got your back:- Cancel sent transactions- Bump sent transactions- Bump receiving transactions- Fee control from 1 sat/b- Live fee calculation- Push Notificatio...