Bitcoin and UK Tax? Cashing out 100+ BTC's

[veeman]

Hi,

After doing my own research. I know the 20% UK VAT is not applicable but it falls under 3 sectons

I earnt it via trading for years and never cashed in

A. Declare trading and I believee the Capital gains will be 20%...Thats alot.

B. No way do I want to declare as income tax as this is what mining falls under as it incurs 45%. Does Trading fall under income tax?

C. Gambling incurs no tax....is there a way of me running it through a gambling site and cashing out that way

Any other ideas. No way do I want to incur a 45% income tax. 20% is livable but its still too much to hand for no reason

Has anyone had experience? Im goin to hold anyway but want to get all my bases covered until the day I decide.

Too the moon!

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[Chakraball]

Good question, I don't know the answer but would like to add what do you class as trading ?
 If I bought Bitcoins years ago before AML regs came in and just sat on them and now decided to sell at a massive profit is that classed as trading ? Would I have to prove where I got the coins ?

[LFC_Bitcoin]

It's a question all of us UK HODLERS will need to know the answer to when we eventually come to sell. 20% would be annoying but I suppose doable as the OP but no way am I paying 45%.

[veeman]

45% no chance

Im tenptes to say i invested many years ago on mtgox and took out before the scam.

Ive mixed my btc so no way they can prove one way or another that i didnt trade

That way i cannot prove that i have bought of mtgox and hopefully automatically fall under 20% capital gains

Then again paying 20% is ridiculous. Id be more happy with nothing. I dont see why we should be taxed on what essentially was a gamble
 
If you run through gambling sites tho that incurs no tax but thats a different kettle of fish altogether

Its one alot of us will need to consider

[Foxpup]

Any time you sell something for more than what it was worth when you acquired it (by whatever means), you owe capital gains tax on the difference. Trying to conceal that fact by making it appear that you won the money gambling is money laundering. (It's also one of the more common money laundering schemes, so don't think investigators won't think of it.)

[Yakamoto]

Cashing out hundreds of BTC in a place like the UK? Good luck trying to get around that one and not declaring taxes on it, unless you're really trying to get in trouble with the tax agencies. The best case in that situation is to simply not put it into a bank account ever, but that is against the law and I would never advise breaking the law.

Might be best to declare it as capital gains. Gambling won't be one of the better ways to move hundreds of BTC.

[cpfreeplz]

If we were talking about a one time 5000£ withdrawal then I wouldn't see an issue but with such a huge amount you're pretty much screwed on getting taxed. It's not income tax though, so don't worry about that. It's capital gains.

[Vaskiy]

Cashing out 100+ bitcoin will surely make you pay taxes if the amount is transferred to your bank account. It is possible to find a trader and make a direct exchange of bitcoin for fiat on face to face trading. This will be worth than losing big amount on paying taxes.

[franky1]

UK VAT is about you professionally selling something as a value added product.
bitcoin is not a value added product so dont worry.. no VAT -(out of scope of VAT)

if you are a business you can offset how much you invested IN.. against how much you want to withdraw (coin for coin). the profit or loss coin for coin is then set for or against corporation tax

if personal it is income tax.
again offset whatever you bought the coins at against what the value of the coins you withdraw. to give you the income (profit or loss)

https://www.gov.uk/government/publications/revenue-and-customs-brief-9-2014-bitcoin-and-other-cryptocurrencies/revenue-and-customs-brief-9-2014-bitcoin-and-other-cryptocurrencies

must people set themselves up as a trust.. but not as beneficiaries.. instead as administrators (which you can then take a salary/commision or administer how its spend without the total funds 'technically' being yours)

then you can do things like pay for a cough 'company car' cough and get that wrote off for tax purposes

usually best to speak to an accountant

[freedomno1]

Seems like a Legal Discussion topic how you tax it depends on the UK interpretation of the tax code on whether it is treated as property or as capital gains.

I lean towards treating this as a capital gain based on the fact its a personal investment and you said it was from trading, the tax rules may be rewritten post-brexit so they will no longer need to be in line with the European Union application in the future but you can likely assume EU laws. Presume no VAT until Brexit is finalized.
http://bitlegal.ioblog/2015/05/evolution-of-the-tax-treatment-of-digital-currencies-in-the-uk/

Otherwise aim to be at higher end of a tax bracket but not surpassing it to keep the overall income tax lower.
http://map.bitlegal.io/nation/GB.php

Non-Trading Services

If your trading profit is not taxed under Income Tax or Corporation Tax then most likely Capital Gains Tax will apply. Check with your accountant on your particular circumstances.

[Idaho]

Yes capital gains tax applies. However there are a few important details. It is a tax on gains - not on total. So it does depend on purchase price.

Firstly you get 11k of gains as an allowance. After that the income tax thresholds apply. These are annual allowances resetting in April. So consider the timing of any declaration.

There is something called entrepreneur lifetime relief. This is for people selling up a company and retiring - if you can work out that - you get 10 million tax free.

https://www.rossmartin.co.uk/tax-guides/110-capital-gains-tax-rates-a-allowances

[Dice-Bet]

Or you could get a big safe. Slowly turn your bitcoins into piles of cash and spend it over time! haha

[Wendigo]

I suggest that you contact an accountant or a lawyer who is acquainted with Bitcoin and digital currencies in general and ask them how to turn your digital assets into cash in the cheapest way possible. Tax evasion could land you in serious trouble. This forum is not the perfect place to seek advice

[Dice-Bet]

I suggest that you contact an accountant or a lawyer who is acquainted with Bitcoin and digital currencies in general and ask them how to turn your digital assets into cash in the cheapest way possible. Tax evasion could land you in serious trouble. This forum is not the perfect place to seek advice

Yeah on a serious note I agree with you. I think it would make a good website for people to get a general idea of the laws related to capital gains of Bitcoin for each country. Especially now with the price rise!

[AngryDwarf]

Yes capital gains tax applies. However there are a few important details. It is a tax on gains - not on total. So it does depend on purchase price.

Firstly you get 11k of gains as an allowance. After that the income tax thresholds apply. These are annual allowances resetting in April. So consider the timing of any declaration.

There is something called entrepreneur lifetime relief. This is for people selling up a company and retiring - if you can work out that - you get 10 million tax free.

https://www.rossmartin.co.uk/tax-guides/110-capital-gains-tax-rates-a-allowances

I think this is possibly the right answer, but I am not an accountant.

I suggest that you contact an accountant or a lawyer who is acquainted with Bitcoin and digital currencies in general and ask them how to turn your digital assets into cash in the cheapest way possible. Tax evasion could land you in serious trouble. This forum is not the perfect place to seek advice Wink

I would follow this advice. Try finding an accountant who is versed in crypto, unfortunately many are not, believing bitcoin to be this anonymous thing used for buying illicit items on the internet.

My scenario is rather different. All my BTC has been acquired through mining, either direct or through alt exchange. Supplemented with a little bit of alt coin trading and meager faucet winnings. Not sure at all how that would be dealt with should I cash out.

[LoyceV]

Ive mixed my btc so no way they can prove one way or another that i didnt trade

That way i cannot prove that i have bought of mtgox and hopefully automatically fall under 20% capital gains

In the Netherlands they now have plans to automatically suspect anybody of money laundering if they've used a mixer. It's not implemented yet, and I don't know how UK taxes work exactly, but if it's anything like here you have to prove you earned the money in a honest way.

If it's enough money, I can imagine a temporarily move to another country, cash out legally without having to pay capital gain tax, and move back to the UK afterwards.

[shannen87]

Why don't you move your BTC to a BTC Debit Card like cryptopay and then withdraw every day up to 2000EUR?

[Xester]

Hi,

After doing my own research. I know the 20% UK VAT is not applicable but it falls under 3 sectons

I earnt it via trading for years and never cashed in

A. Declare trading and I believee the Capital gains will be 20%...Thats alot.

B. No way do I want to declare as income tax as this is what mining falls under as it incurs 45%. Does Trading fall under income tax?

C. Gambling incurs no tax....is there a way of me running it through a gambling site and cashing out that way

Any other ideas. No way do I want to incur a 45% income tax. 20% is livable but its still too much to hand for no reason

Has anyone had experience? Im goin to hold anyway but want to get all my bases covered until the day I decide.

Too the moon!

In my own opinion you cannot be taxed for just holding bitcoins in your wallet. Bitcoin is not to be considered like a property such as a piece of land, house that can be taxed by just owning it. But bitcoin can be taxed with income tax or value added tax and such taxes will be taken out immediately through the fees you pay in the exchanges the moment you convert it to your local currency.

But do take note that different countries has different style of taxing things and my opinion could be applicable or not applicable to you depending on what country you are now.

[shintosai]

Cashing out 100+ bitcoin will surely make you pay taxes if the amount is transferred to your bank account. It is possible to find a trader and make a direct exchange of bitcoin for fiat on face to face trading. This will be worth than losing big amount on paying taxes.

this is very risky but worth of trying if you can get someone who's also interested with your btc, i guess you can't skip the taxes with that huge
amount so better to take some risk than paying a huge fee for your government, just be very careful and always ask for some help coming from your friends or relatives who understand this matter.

[Red-Apple]

with a sensitive topic like this, that can cause you serious problems down the line if ignored, you are better off asking a real professional in the real world instead of trusting what a bunch of random people online are saying.
not saying all of it is useless or wrong but are you willing to take that risk!