Welcome, friends of BC Bitcoin!
Self Assessment payments are due by midnight on the 31st of January 2019.
Are you sure you haven’t missed any taxable events?
It’s common when investing in cryptocurrency to focus on profit in terms of fiat, and to only consider taxes when those profits are realised. However, many investors also engage in activities which trigger taxable events without realising they are doing so.
The most common example of this is crypto-to-crypto trading. HMRC confirmed last month that trading one kind of crypto for another is potentially liable for Capital Gains Tax. So even if you see yourself as a HODLer, if at any point you bought alts with BTC or ETH between the 6th of April 2017 and the 5th of April 2018, then you could have realised some capital gains worth considering.
Let’s quickly look at how to calculate some example gains. You’re expected to convert everything to GBP for HMRC.
Say you’ve bought some XMR to hold long term with BTC:
#1. If you bought BTC on the same day you bought the XMR, then:
Capital gains = GBP value of XMR at time of trade - GBP/BTC exchange rate at time of BTC purchase * amount of BTC traded for XMR
#2. If #1 does not apply, then you move on to the Bed and Breakfasting Rule:
Capital gains = GBP value of XMR at time of trade - average GBP/BTC exchange rate of all BTC bought within the following 30 days of the trade * amount of BTC traded for XMR
#3. If #1 and #2 do not apply, then you move on to the Crypto-Pool Rule:
Capital gains = GBP value of XMR at time of trade - average GBP/BTC exchange rate of all BTC bought before the trade * amount of BTC traded for XMR
As you can see, things can get complicated very quickly, and it’s always best to keep track of these transactions on a regular basis.
If you still need to file your Self Assessment with HMRC this month, do visit blocktax.uk for a complete action plan. If you need a primer on UK crypto tax, we’ve designed an efficient course for individuals. If you need computational software, use the code BLOCKTAX10 for an offer with our friends TokenTax, an award-winning crypto tax platform. They’ll be hosting two webinars this month in case you need any personal help on the 24th and the 29th of January. Finally, do feel free to contact us if you are looking for accountancy or tax advisory services.
Best of luck to you!