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Cryptoassets for individuals - Tax

Discussion in 'Crypto Currency & Mining' started by Wizzkidy, 19 Dec 2018.

  1. Wizzkidy

    Wise Guy

    Joined: 25 Jun 2003

    Posts: 1,627

    The Government have published the individual Tax paper today

    https://www.gov.uk/government/publications/tax-on-cryptoassets/cryptoassets-for-individuals

    Some key points

    Airdrops - Taxable
    Mining - Taxable
    Soft or hard forks - Taxable generally

    Basically, everything taxable and down to the individual to keep records of everything

     
  2. Psycho Sonny

    Caporegime

    Joined: 21 Jun 2006

    Posts: 35,963

    the most imortant point is:

    "HMRC does not consider cryptoassets to be currency or money."

    it's an asset not a currency as far as they are concerned. which is why they now refer to them as cryptoassets instead of cryptocurrencies.
     
  3. wesley

    Soldato

    Joined: 29 Jul 2003

    Posts: 7,468

    very interesting point. just like gold asset.
     
  4. DarrenM343

    Soldato

    Joined: 19 Oct 2008

    Posts: 5,500

    It's going to be a PITA but that's taxation.Especially trading between coins and working back to the GBP value. If playing with small amounts seems hardly worth it for the records you'll have to keep! Just initial thoughts without considering it too closely.
     
  5. Th0nt

    Capodecina

    Joined: 21 Jul 2005

    Posts: 11,679

    Location: N.Ireland

    And when does it come into force?
     
  6. Psycho Sonny

    Caporegime

    Joined: 21 Jun 2006

    Posts: 35,963

    active trading is considered for income tax not CGT.

    hope crinkleshoes has been doing it right and paying 40% instead of the low CGT amount
     
  7. Psycho Sonny

    Caporegime

    Joined: 21 Jun 2006

    Posts: 35,963

    it's been in force for a while. it's just been updated.
     
  8. Davedree

    Mobster

    Joined: 27 Mar 2010

    Posts: 3,054

    A couple of questions, what would a miner be taxed under ,(CGT or income) and what rates would be applied?

    Why is the cost of electricity and the amount of power used, not an allowable cost in CGT?
    Surely if you cashed up at a loss of say £100 but you prove you used £140 of electric to get the £100, then theres no profit to claim for.
     
  9. Bigpops

    Mobster

    Joined: 18 Oct 2002

    Posts: 4,374

    Location: Sheffield, UK

    Well nobody here's is going to have to pay anything, because everyone is rekt, and there's no tax on losses.

    Plus, you'd have to make £10K to pay any capital gains tax, and if anyone here has made £10K that didn't already have several times that to their name, then I'll be impressed.

    The examples make me laugh. Victoria buys 100 tokens for £1000, then a further 50 tokens for £125,000! Where'd she get another £125K from all of a sudden? Her original £1000 did 250x return, but she can't buy them out of that.
     
  10. Th0nt

    Capodecina

    Joined: 21 Jul 2005

    Posts: 11,679

    Location: N.Ireland

    Totally agree with this. If you pay tax on your utility to use the tool i.e. mine it then surely this is straight away offset. If it only applies to trading where you buy it from fiat sources then Im all ears on the accountants explaining ways around this but you cant expect miners to take the hit when hardware and electric are being taxed already to then tax another thing after doesnt make any sense.
     
  11. James 3.142

    Gangster

    Joined: 25 Aug 2017

    Posts: 410

    It is unlikely he would be caught by this as I think he also said he has a full time job. You would probably need to be doing this full time as your main job to be caught by that rule, hence why HMRC also states:

    "This is likely to be unusual, but in such cases Income Tax would take priority over the Capital Gains Tax rules."

    It will probably be similar to a stocks and shares trader. Buying and selling stocks and shares every day does not automatically make you trader and subject to income tax.
     
  12. Psycho Sonny

    Caporegime

    Joined: 21 Jun 2006

    Posts: 35,963

    it's taxable as income when you receive payment. if you choose to hold on to it and sell after several years and the price has risen. then the amount it has risen is subject to CGT.

    so both
     
  13. Telecaster

    Soldato

    Joined: 17 Jun 2012

    Posts: 5,434

    Are miners supposed to keep a record of the electricity costs at the time of mining then?
     
  14. Th0nt

    Capodecina

    Joined: 21 Jul 2005

    Posts: 11,679

    Location: N.Ireland

    Seems rediculous doesnt it, unless the savvy accountant types can help abuse this so that you pretty much write off a chunk of the mined coins via expenses making it worthwhile.
     
  15. Davedree

    Mobster

    Joined: 27 Mar 2010

    Posts: 3,054

    So many questions for my self assessment tax return,
    Seems from reading the Policy Paper I am no clearer in my understanding of how they will calculate tax percentage, they are going to screw the miner, but it's not clear if you can claim for electricity usage and costs when taxed under income purposes.

    For example It's like they'll see £800 coming into the bank account and they will not accept that it took £400 of electricity and purchasing of 3xVega's at £400 each to get that £800, which is a loss to you.

    Also will this be enforced for cashouts from the 19th dec, or they going to backdate it ?
     
  16. Th0nt

    Capodecina

    Joined: 21 Jul 2005

    Posts: 11,679

    Location: N.Ireland

    Yeah this wont work for miners unless some clarity comes or a loophole is found.
     
  17. GeneralD

    Wise Guy

    Joined: 9 Mar 2008

    Posts: 1,511

    My thoughts exactly, coinbase appears to allow you to download a pdf of trades so that helps. I used Binance as well and that appears to only go back 3 months....

    I am confused about tax at disposal. If I trade 4 LTC (£25 each) for 1 ETH (£100) that appears to count as a disposal, but the gbp value is the same at the time of the trade so what am I paying tax on?
     
  18. DarrenM343

    Soldato

    Joined: 19 Oct 2008

    Posts: 5,500

    I think in that case there would be no tax to pay. But if you bought LTC at £25 each and when you traded to 1 ETH their value is now £30 each you'd have to log a profit of £5 each at that point, well, the total profit logged anyway. Doesn't mean you'll have to pay tax on it, unless you exceed the capital gains limit for the year, but you'd need to have a record of it.
     
    Last edited: 21 Dec 2018
  19. muon

    Capodecina

    Joined: 8 Nov 2006

    Posts: 20,025

    Location: London

    I doubt this applies to miners like that.

    My guess is that mining should be counted as income from which you can obviously subtract costs, much like a self employed individual would.

    Would be interesting to here how CGT then applies to any increase/decrease.

    What would the date of valuation be for income purposes and then for future CGT calculations? End of the tax year?
     
  20. Psycho Sonny

    Caporegime

    Joined: 21 Jun 2006

    Posts: 35,963

    when the coin is mined whatever it is valued at then is taxable as income.

    so if you mined £10K worth today then you pay IT on £10K on your SA at the end of the year.

    if it's worth £100K in 5 years when you sell then you pay CGT on £90K in 5 years time when you sell. as it's went up by that much when you sold.