The confusion comes from websites and blogs that do not use the term coin and call it as native token instead.

A good example is Investopedia which calls ETH as the native token of Ethereum blockchain and defines erc-20 as smart contract tokens.

Taken from https://www.investopedia.com/news/what-erc20-and-what-does-it-mean-ethereum/
"What's the Difference Between ETH and ERC-20?

Ether (ETH) is the native token used by the Ethereum blockchain and network as a payment system for verifying transactions. ERC-20 is the standard for creating smart contract-enabled fungible tokens to be used in the Ethereum ecosystem."

The moment you sold for GBP.

If you don't plan on getting an accountant, you should study on your own and not just ask questions or hope that we'll spoon-feed you. Tax is tough if this is your first time but you're lucky to have all the resources you needed online. Spend time to read or watch them.



Welsh - yes you get taxed on profits or gains. The words used by James was also £40,000 profit and I assumed that the amount was already the net of his initial investment. Perhaps it's a confusion of using the word profit instead of sales revenue.

In basic accounting, sales revenue - cost of investment = profit

It's difficult to explain but I'll try to make it simple using some assumptions.

Let me first correct my previous answer. It's not just based on the your taxable income for the year but also on the taxable gains you made from selling other assets.

taxable income comes from your salaries less deductions
taxable gains comes from profit selling cryptocurrencies less deductions

Aside from crypto investing, let's assume you also have a job and your taxable income is £30,000.

Using your first example of selling at a £40,000 profit. That will be your taxable gains assuming you have no deductible losses.

To determine what income band you belong, taxable income + taxable gains - capital gains allowance
£30,000 + £40,000 - £12,300 = £57,700. This is above £50,270 which means the rate applicable to your capital gains is 20%.

Capital Gains Tax:
£40,000 - £12,300 = £27,700
£27,700 * 20% = £5,540

Once again, I suggest that you consult an accountant. Taxation can be complicated and you could miss other details that affects the computation. Even my example could be inaccurate.

It depends on your taxable income for the year.

10% basic rate will be charged if your income band is up to £50,270
20% higher rate will be charge if your income band is £50,271 and above

You won't be taxed if your income is equal to or lower than the tax allowance which is currently £12,300.

Some of the amounts and rates I mentioned could be wrong or could be different in the coming years. Make sure you stay up to date and maybe consult an accountant for more accurate tax filing.

If you ever talk to your friend again, ask what crypto marketing company he is working for. Knowing that could explain why he thinks that way. It's safe to say that the people behind the bitcoin fork are aggressively marketing their coin. It's not surprising if they are already in collaboration with some agencies so it's natural that their employees are influenced by that.