Are you one of the many millions of people who saw the price of bitcoin start rocketing in 2017? Are you one of the hundreds of thousands who bought in? Are you one of the thousands of buyers who is resident, for tax purposes, in the UK?
If your answer is yes to the last question, you need to take a deep breath and read on.
Cryptocurrency is still in its infancy as far as regulators are concerned, with few rules around what you can do with bitcoin and its peers and what can be done to you with it.
While it’s not the Wild West, you’re advised to use registered and regulated platforms, such as eToro, to trade and invest to ensure the best protection from scams.
But if those who make the legal application around burgeoning financial trends are a bit behind the curve, those seeking to tax it are not.
You might not be aware, but if the size of your pot of bitcoin – or other crypto – has risen considerably since you bought it, you need to be thinking about your potential liabilities to HMRC.
In December, HMRC published a list of ways your bitcoin can make you liable for a range of taxes. The main one for those who bought the rising bitcoin in 2017 and promptly forgot about it is the potential for Capital Gains Tax to be paid when you do get around to selling it (or already have).
CGT is a levy on the things you make a profit from for doing very little. For example: you buy a house, live in it for 20 years and sell it on for double what you paid. Unless you knocked the place down and rebuilt it (at considerable expense), HMRC would likely demand you paid it some CGT.
A painting you bought at a car boot sale for £1 turns out to be a Rembrandt? The couple of million you make from selling it at auction is liable for CGT.
It’s the same with cryptos. Just because you got in at the right time, doesn’t mean the taxman lets you off. Like with other investments, cryptocurrencies held specifically to make money are classed by HMRC as “chargeable assets” and incur appropriate taxes.
It is also up to you, the investor, to inform HMRC that you have made the gains and offer up the cash. If you don’t there will be some tough questions to answer (and potentially fines to pay).
Two important points: CGT is only applicable when you *sell* the asset, not when you just keep holding on and you also get an allowance of £12,000 a year that is CGT-free, but this has to be shared with any other type of asset you sell or dispose of.
But if you got in very early and intend to make a tidy profit from your crypto-savviness, take a look in your digital wallet and have a think about how much you could end up owing.
You can also listen to eToro, HMRC and ICAEW explore the cryptoasset landscape, the future of crypto, the tax levy and dispel common misconceptions in our webinar here.
Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework. Your capital is at risk CFDs work, and whether you can afford to take the high risk of losing your money.
Applies to UK taxpayers only.
The information above does not constitute financial advice, always speak to a tax professional to ensure it is right for your specific circumstances.
eToro does not represent any government entity. You should check with a tax professional or HMRC if you are paying the right amount of tax.
Bitcoin of 2020: On the Rise, Better Established, and Much More Stable
Why Bitcoin is Continuing to Climb, from More Solid Ground Than Ever
Last night saw Bitcoin once again soaring up the market, with a 6% increase over the course of three hours. This continues a fantastic start to the year for the world’s largest decentralized currency, which is up 30% since January 1st, and pulling along with it several other primary cryptocurrencies, including Ether, Litecoin, Ripple, and Dash.
A Significant Moment for Bitcoin
January 2020 is certainly proving highly significant for Bitcoin. The sharp increases and painful falls of the past pale into comparison with now, as the current increase seems to come from a far better-established position with much more stability. Furthermore, the activity around Bitcoin is expanding in exchanges, banks, and other financial institutions, together with its legitimacy and relevancy.
World Economic Forum
Last week, at the World Economic Forum annual summit at Davos, Switzerland, Bitcoin, cryptocurrencies, and blockchain technology were honored guests. Many of the billionaires, bankers and treasury ministers who gathered in Davos are still fairly skeptical about the decentralized economy, but despite this, they also realize that they cannot stop it.
The World Descends into Chaos, And Bitcoin is on the Rise
It seems that the more agitated the world agenda, the more Bitcoin’s popularity grows, and strengthens its status as a…
World’s Richest 22 Men Are Worth The Same As All 325 Million Women In Africa — New Oxfam Report Reveals
The 162 richest people on the planet boast the same wealth as the poorest 50 percent — 3.85 billion — in the world.
From Tuesday, January 21, close to 3,000 delegates — including 53 heads of state — from 117 countries, will participate in the WEF summit in Davos-Klosters, Switzerland. According to the website blurb, the WEF Annual Meeting is “the foremost creative force for engaging the world’s top leaders in collaborative activities to shape global, regional and industry agendas at the beginning of each year”.
This year’s topic, for the great and the good of the business world and politics, is “stakeholders for a cohesive and sustainable world”. While the hellish fires raging in Australia fan the flames for climate change, the perverse irony that most of the 774 public speakers will have been flown into the summit will not be lost on the people who are truly concerned about the heating of the world.
Similarly, that many of the wealthiest people in the world will gather to no doubt use the WEF platform to further boost their richest, through additional business deals and contacts, while…
Cryptocurrency Prices Rally Towards Double-Digit Gains in 2020
The cryptocurrency market has started 2020 with a huge bang, expanding by an impressive 23% within the first two weeks of the year. The overall market capitalization of the cryptocurrency market – a measure of the size of the market – has grown from $192 billion at the start of the year, to well over $240 billion by the middle of January.
Leading the pack is Bitcoin (BTC), which constitutes more than 65% of the overall market size. Going from just under $7,200 at the end of 2019 to a high of $8,800, Bitcoin recorded double-digit gains within two weeks. January 14 saw a spike of more than 11% in Bitcoin’s price, fuelling speculation that the two-year-long cryptocurrency recession could finally be over.
Among the many factors that contributed to Bitcoin’s price increase was the geopolitical upheaval emanating from increasing tensions between the USA and Iran, which led to a flight of safety capital by investors, to safe-haven assets such as gold. Already established as a manifestation of digital gold, it seems hardly coincidental that the prices of both gold and Bitcoin went up.
Another catalyst for the increase was the official…
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