Crypto enthusiasts will know that just because you didn’t know about the tax liable on cryptocurrency gains doesn’t mean you don’t have to pay it. Ignorance is no defence against the taxman.
But there are ways of reducing the tax you have to pay, and they are all entirely legal.
The main tax a holder of bitcoin is most likely to pay is on any gains made when selling the asset. This is called Capital Gains Tax (CGT). Like any investment, if you don’t do anything to make the value increase, it’s seen as something of a windfall – and the government wants a share of the action.
You are liable for tax on the gains you make selling cryptoassets for cold hard cash, exchanging cryptoassets for a different type (i.e. bitcoin for ripple), using cryptoassets to pay for goods or services or giving them away to someone else.
Importantly, you can give the cryptos to a spouse or civil partner and not be liable for gains… but you are just handing over the liability to them to sort out.
Also, don’t think you can just offload them onto a charity, as HMRC can take a view that you are doing it just to get out of paying what you owe.
However, CGT only kicks in after you’ve made £12,000 in one tax year across all the assets you have sold or disposed of – this includes houses, fine wines, expensive watches etc. This is the allowance you are given annually by Her Majesty’s Revenue and Customs.
There are ways you can offset the tax, too.
Firstly, you can knock off the amount in pound sterling that you originally paid for the asset – in this case, crypto. So, if you paid £100 for a wallet now worth £1,000, you are only liable for £900. You can offset transaction fees paid before the transaction is added to a blockchain and the cost of any advertising you did to find the cryptos initially or when you decided to sell.
Any professional costs you incurred drawing up a contract for when you bought (or even took ownership for free) and disposal of the cryptoassets can also be set against gains.
And happily, the cost of working out how much you can offset against gains is also something that can be counted as one of these allowances.
It is up to you as the owner and seller of the assets to make HMRC aware of your activity, just as it is with any other kind of tax. Make sure you are up to speed with your allowances – and make the most of them.
Check out eToro’s crypto tax calculator to see if you owe tax on crypto.
Applicable to UK taxpayers only.
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…