Doing a Self Assesment for my "Side Hustle"

[seanyc5]

Hi all,

So aside from my normal full-time employment, I jumped on the passive income/side hustle bandwagon last year.

It's not a lot at all I'm still calculating things.

I have done S.A before but was self-employed then.

Now that I am employed full time, is the process the same to fill out the S.A on my "extra" income.

I am sure most would not even bother, and the thought has crossed my mind.

Are you still able to earn £1000(gross) on top of your normal job? without having to declare it, that's what it looks like to me anyway.


About £250 of the profit is actually from mining!

Just thought I would ask for some tips.

 

[lurkio]

I am in the same situation full time job with part time self-employment - you have to do a SA online with HMRC and enter all necessary data (inc stuff with full time job)

Are you still able to earn £1000(gross) on top of your normal job? without having to declare it, that's what it looks like to me anyway. - No If you earn extra money you have to declare all of it, but you get to put in expenses incurred as well

 

[Derek W]

Second job you mean?

 

[seanyc5]

Second job you mean?

In the eyes of HMRC yeah I suppose. In reality, it's just a website that gets maybe 1 hour a week of my time along with mining that gets 0h of my time haha so I would hardly define it as a second job, but I know what you mean.

 

[Maccy]

Mining profits counts towards capital gains I think, and you only have to declare over £12,300 per year.

 

[Raymond Lin]

Mining profits counts towards capital gains I think, and you only have to declare over £12,300 per year.

Mining is technically income tax, mining involve “work” therefore its part of your income tax allowance.

Trading profit is capital gains.

 

[Maccy]

Mining is technically income tax, mining involve “work” therefore its part of your income tax allowance.

Trading profit is capital gains.

So what happens to the Bitcoin that you’ve earnt? According to gov website it falls under capital gains.

 

[Raymond Lin]

You mean you mined it and it was worth X and then 2 years later and the same thing is now worth Y?

I guess it depends when you decide to turn it into real world money. You technically worked for it so it should be income tax. I am not an accountant, that's why i have one, but it's my understanding mining is income tax.

 

[seanyc5]

As I understand it mining profit is classed as income at the price it was worth at the time. Say £200 worth of BTC you would pay the tax on. If that £200 then grew to over the CGT limit of £12,300 then you would also have to pay tax on the gains over the allowance.

Buying and trading coins would be classed as capital gains. I think its safe to say most of us wont be over the £12,300 limit anyway unless we get lucky or put some pretty decent capital in to start with!

 

[Maccy]

There’s a few on here who have had notable gains from crypto, I wonder if/how they declared the earnings...

 

[seanyc5]

There’s a few on here who have had notable gains from crypto, I wonder if/how they declared the earnings...

Yeah I think its safe to say most wont haha. I supposed it depends on where the coins are held etc. with KYC and all that. I read that coinbase will let HMRC know of any gains above £5000 even though that's well under the allowance. I am not sure how true that is but still, I would not be surprised if the big exchanges did this to comply as much as possible and not pee anyone off who potentially has the power to shut them down.

EDIT - Currently all my mining profits from Nicehash are being sent straight to Block-Fi, so I'm just keeping it, none is being converted into FIAT not that it matters in the eyes of HMRC.

 

[antijoke]

I am in the same situation full time job with part time self-employment - you have to do a SA online with HMRC and enter all necessary data (inc stuff with full time job)

Are you still able to earn £1000(gross) on top of your normal job? without having to declare it, that's what it looks like to me anyway. - No If you earn extra money you have to declare all of it, but you get to put in expenses incurred as well

This is incorrect isn’t it? It’s called something like “entrepreneur/freelancer” allowance isn’t it? Where you can earn £1,000 without having to declare it

 

[Raymond Lin]

As I understand it mining profit is classed as income at the price it was worth at the time. Say £200 worth of BTC you would pay the tax on. If that £200 then grew to over the CGT limit of £12,300 then you would also have to pay tax on the gains over the allowance.

Buying and trading coins would be classed as capital gains. I think its safe to say most of us wont be over the £12,300 limit anyway unless we get lucky or put some pretty decent capital in to start with!

Since you are constantly mining, how do you determine "price at the time" and how much do you measure? like per 1 BTC or per 1/10000 BTC?

Like take an Artist as an example, if Picasso paints something. His work sold is subject to income tax in its entirety at the time of sale surely. Not the value of the painting the second the last drop of paint hits the canvas and then Capital Gains from then to 20 years thereafter.

Right?

 

[seanyc5]

Since you are constantly mining, how do you determine "price at the time" and how much do you measure? like per 1 BTC or per 1/10000 BTC?

Like take an Artist as an example, if Picasso paints something. His work sold is subject to income tax in its entirety at the time of sale surely. Not the value of the painting the second the last drop of paint hits the canvas and then Capital Gains from then to 20 years thereafter.

Right?

I think it should be done from the time you actually get a payout. Like 0.001BTC in Nishash for instance. I have made a note of all the payments I got from nicehash, typically it's around £40 at the current BTC price for each 0.001BTC minimum payout.

In your painting example, the artwork does not have a value until it is sold first time around. Once a dealer gets a nice dinner and a backhander, they may value it at £1 million, but it is surely worthless until the moment it is sold? Perhaps it's a bad analogy as art is a very unique asset class.

If someone pays £1million then the tax is paid on that. The new owner would then be subject to capital gains on the next sale I think that's how it works anyway.

I may be totally wrong though haha. All I know is high end art is just a place for people to park large sums of money and hide it lol




This is what I found

"If you’re mining coins as a hobby, then any coins you receive as a result of your mining will be added to your taxable income, using their value at the time you received them (minus any reasonable deductions)"

 

[cheesyboy]

Are you still able to earn £1000(gross) on top of your normal job? without having to declare it, that's what it looks like to me anyway.

Are you still able to earn £1000(gross) on top of your normal job? without having to declare it, that's what it looks like to me anyway. - No If you earn extra money you have to declare all of it, but you get to put in expenses incurred as well

Yes, up to £1,000 per year of casual self employment income is exempt from tax and reporting requirements.

https://www.gov.uk/government/publi...ent-helpsheet/hs325-other-taxable-income-2018

 

[[FnG]magnolia]

@Kemik

@Pudney

Time for some big brain accounting, yo.

 

[Pudney]

@Kemik

@Pudney

Time for some big brain accounting, yo.

"Simply" put, there aren't any real specific rules about crypto, so it's all based on the smorgasbord of English legal history to get to an answer. It's likely that mining is a trading activity and holding crypto is an investment activity and thus falls under capital rules. In practical terms it would depend on the specific facts.

In terms of mining and then holding for the long term, it's perfectly possible for something to have been "income" at one point and later change to "capital" or vice versa. In these situations you have what is known as an appropriation to/from stock depending on the way it's changing, and the tax system will normally deem there to be a disposal and tax you accordingly.

Not declaring your profits from mining crypto or trading in it is potentially "cheating the public revenue" (yes that's a thing, it's a common law criminal offence, I got scoffed at once on here for suggesting it) depending on the level of profit and whether it actually needs reporting in the first place.

 

[Psycho Sonny]

There’s a few on here who have had notable gains from crypto, I wonder if/how they declared the earnings...

If you are mining it's income tax. When you sell its capital gains of the difference between the value when mined and value when sold.


For example if I'm mining and earning £100 a week worth of bitcoin. That is £100 a week of income therefore fully taxable so £5200 a year would be declared as annual income.

Now let's say I hold onto it for 10 years and that £5.2k is now worth £52k. That is now subject to capital gains so £46,800 is declared as capital gains. As you minus the original £5.2k you essentially already covered for under income tax.

You also have to do capital gains declaration every time you transfer from one coin to another.

 

[dlockers]

If you are mining it's income tax. When you sell its capital gains of the difference between the value when mined and value when sold.


For example if I'm mining and earning £100 a week worth of bitcoin. That is £100 a week of income therefore fully taxable so £5200 a year would be declared as annual income.

Now let's say I hold onto it for 10 years and that £5.2k is now worth £52k. That is now subject to capital gains so £46,800 is declared as capital gains. As you minus the original £5.2k you essentially already covered for under income tax.

You also have to do capital gains declaration every time you transfer from one coin to another.

Best (and simplest) explanation so far IMO. Can you write off the cost of the GPUs?

 

[Psycho Sonny]

Best (and simplest) explanation so far IMO. Can you write off the cost of the GPUs?

If they were used solely for mining (no gaming what so ever) and bought for that purpose then yes.

It's a bit like a business phone or business vehicle in that sense where it can be apportioned I believe if there is personal use too,if bought personally but if bought through a company then technically all personal use would be a deemed supply and taxable. You also have to factor in resale if you sell it on that would then be taxable so it's unlikely to be a 100% write off unless you mine it into the ground.

I do wonder if you get paid more than the VAT threshold would you then need to register for VAT and now your payments received are vat inclusive?

I'd say for most bedroom miners they likley aren't paying any tax what so ever much like all the cash in hand jobs, etc. So they wouldn't be claiming any expenses either as they are all just pocketing the cash.

It's easy enough to drip feed profits back to yourself in such a manner or launder crypto. For example if I buy a Tesla using bitcoin who would know if I paid tax on that or not? It's not as if car dealerships release information relating to car purchases to the authorities. It's the larger it gets the harder it would be to hide. I doubt anyone who makes a few quid off crypto declares it at all. You would have to get into the hundreds of thousands or millions before you have to think about declaring it and then you have crypto tax havens like Portugal where you can legally cash it out with no taxes.