Bitcoin Forum

The Financial Times is reporting that the UK is to scrap taxes on Bitcoin trading. Here's a small quote from the article (behind a paywall)

"In a meeting with a group of UK traders last week, HM Revenue & Customs said it would not charge the 20 per cent VAT tax on trades, which entrepreneurs had complained made their businesses globally uncompetitive. HMRC went a step further, saying it would not charge the tax on their margins either.

The ruling sidesteps the thorny question of whether to class Bitcoin as a currency, but effectively treats it as such, and bases its policy on the EU law that exempts payments and transfers of “negotiable instruments” from tax."

http://www.ft.com/cms/s/0/1b9f434e-a209-11e3-87f6-00144feab7de.html

Good to see pro-bitcoin policies being put in place in the UK. No doubt the City of London wants in on the trade.

its interesting but necessary to pay taxes. I agree but it should be less.

Here's a link that isn't behind a paywall:

http://webcache.googleusercontent.com/search?q=cache:http://www.ft.com/cms/s/0/1b9f434e-a209-11e3-87f6-00144feab7de.html#axzz2ukj4xD3W

hostmaster, you may be misunderstanding what sort of tax this is. It isn't referring to income tax. It's referring to Value Added Tax, which is similar to a US Sales Tax.

The previous ruling from HMRC was that VAT would be due on the sale of bitcoins as if they were an object or service, thus increasing the cost by 20% to the end user. That is not how trade in traditional currencies is treated in the UK; that would normally be outside the scope of VAT.

The new ruling will treat bitcoin the same, which is obviously good news.

VAT is necessary on bitcoin?!?!? get outta here

spoke to HMRC last year

bitcoins was "out of scope" to of been VAT required so VAT was not needed before.

but atleast we now can 100% know that HMRC wont be requiring us to register for VAT officially now they have formally evaluated bitcoin. and all we have to do is pay income tax.

YAY its official

I thought it was Capital Gains tax, not Income tax?

It'll be capital gains for long term holders cashing out I presume.

Here's a summary from Reddit

Income from miners is VAT exempt

Charges for arranging transactions in crypto-currencies is VAT exempt

Crypto-currencies transferred to fiat is VAT exempt

VAT due as normal for selling goods/services paid in crypto-currencies (calculated in GBP at point of transaction)

Corporation Tax: no special rules apply, it will be treated as foreign exchange and loan relationships

Income Tax: business profits from crypto-currencies taxed as normal income

Capital Gains: gains or losses from crypto-currencies allowable as CG for an individual or corporation tax for a business

Gambling gains are not taxable although losses cannot be offset against other gains

no no no, cant you lot read or atleast research.

capital gains is the about the " tax on margins " that the OP post mentions..again exempt

you only have to pay tax on your income..

for business this is corporation tax (dont confuse it with capital gains)
for personal its income tax.

please research properly and dont speculate when it comes to tax

So if I bought bitcoins with pounds and sold them for pounds, would I have to pay CGT on that? What about bitcoins I received from other people?

No, you'd pay income tax on your profit (or corp tax on your profit, if you're a business).

If you're given a gift and then you sell it, there's no tax on that.

But if trading bitcoins is your business (as a sole trader or actual incorporated business) then you need to pay tax on the profit.

I am not an accountant and this is not tax advice so if in doubt ask your accountant / HMRC.

capital gains tax is only on legitimate financial products/contracts. such as stocks and shares. capital gains tax and bitcoins are not even in the same ballpark to be seen playing together.

Go UK!!

Some good news is always welcome :)

K.

I'm very sure most accountants would not have a clue about bitcoin. I did speak to one once who told me they would have no idea. Maybe there are accountants out there with deep understanding of bitcoin tax issues, but I'm guessing they are difficult to find.

great news!

calm down. I did research old topics and people were saying Capital Gains tax, that's why i asked.

------

I've never had to fill in tax forms so i don't know about this stuff.

STFU

lol. +1 on that.

No need for taxes. Govt can print all the fiat it likes (and I'll be using bitcoin...).

http://www.hmrc.gov.uk/briefs/vat/brief0914.htm

Official shiney!

When I first heard about this it made my life. We're usually the ones to tax the sh*t out of everything xD

sorry for my .... passion .. on this topic but i have known about the 'out of scope' for over a year. because i actually bothered to call HMRC to get at the time their unofficial stance on bitcoins. but time and time again people that do not know much about tax keep on thinking they knew it all and the snowball of confusion ensued.

it has been made clear this time that bitcoins are OFFICIALLY out of scope. so it should not now become another confused saga.

there have been financial businesses(not retail) afraid to set up as they thought they had to become VAT registered, large volume individuals that halted their entrepreneurial spirit and ceased expansion because they were worried about all the tax limits and paperwork requirements for growing large.

i have talked to many dozens of people who's plan was to open up large bitcoin exchanges, but didn't because they would worry about the financial barriers.

for a year now i have been trying to inform people to research the real truth instead of the opinions on reddit/forums that are from people that have not researched the matter.

so i am sorry that after HMRC made their stance clear. that people were still confused.

Damned taxes!

I still don't get exactly when income taxes become due.

Say you're running mining pools for different cryptos, with the intention of not converting the coins from the pool fee to fiat for a year or two.   The following could also apply to miners.

Do income taxes only become due at the moment you convert to fiat?

Or is there some horrible ruling that income taxes are due immediately the coins are mined, in which case this will be terrible to work out the value if coins from multiple different cryptos are coming in from mining all the time.  Also do you then also get charged capital gains on whatever's left when you convert that to fiat, in which case you're taxed twice over, which could result in up to 56% taken in tax in total (40% gone initially in Income Tax if you're lucky enough to be a higher rate tax payer, then up to another 28% of the remainder gone in capital gains)?

yes.... now that was simple

although i dont want to add confusion by talking about trading shares. but.... when trading shares you can buy and sell them as much as you like. but only when you finally put the funds back into your bank account, do you then class the profit as income.

Mine didn't.  When he was preparing my companies end of year accounts, he spotted some transactions he was unsure about, and wanted to know what they were for.  I think he thought he had caught me with my hands in the till.  They were payments to localbitcoin users.  I explained what is was, but he didn't understand.

Anyway, this news on the UK scrapping VAT taxes is welcome but nothing to get excited about.  Britain is closed for Bitcoin business.  You cant open a new bank account if there is a crypto anywhere in your business plan, and existing businesses get lent on - TransferWise being a good example.  I used to be, the best way to send UKP to bitcoin exchanges, was using TransferWise, until the banks told them to stop.

Still its a great step in the right direction. I wont lie I'm actually excited about it but also amazed our government is not openly anti bitcoin.

So am I, although in a sense they are, by not doing anything.  HMRC didn't really have a choice. They were under pressure to show their hand.  Accountants cant do their job without clear guidelines.
The government on the other hand, are doing nothing and letting the banks ban it by stealth.  Until that stops, the UK is closed for crypto business.

I have no doubt UK banks are being right pigs over bitcoin. Are you saying its hard to get a bank account for a bitcoin centred company or its hard to get a loan for said company? Seems if its the first then the only way is to establish the company first and then introduce bitcoin payment systems later ? Yea your right its crap for bitcoin but hey who said this was going to be easy  ;D

Also who are scan.co.uk banking with?

Hard to get a bank accounts for bitcoin related business.  Existing businesses, such as Transferwise have been in trouble too. https://transferwise.com/blog/2013-04/notice-to-bitcoin-users-april-2013/

I guess it's harder for a bank to drop scan.co.uk as a customer, both financially, and from the negative press it might generate.

if only virginmoney done business accounts, im sure Richard Branson would vouch for bitcoin

I don't know anything about UK tax law, but in Canada the law implies that you pay capital gains tax unless your transactions are frequent. Then, Canada Revenue deems you to be a professional trader or merchant of some sort: buying and selling is your line of work. If deemed as such, you or your business pays at ordinary income tax rates.

It's reasonable, for tax laws, so I'm guessing the same system is in place in the UK.

It doesn't really matter as they are using Bitpay to turn it into GBP right away, so no bitcoin accounting needed and bank need never know.

I read somewhere they are keeping a % of transactions. I would go search for it but to busy watching some poor guy called Satoshi get doxxed  :'(