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Author Topic: tax on bitcoin profits in United Kingdom? [Solved]  (Read 18504 times)
Serpens66
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June 13, 2017, 05:44:44 PM
 #1

Hi Smiley

I would like to know how profits from regular bitcoin trading are taxed in UK.
Just regular trading on bitcoin exchanges.
Hold the coins not longer then 1 year, in case this does matter.

In germany selling btc is a "private sell", so profit is added to your income and you pay income tax, if you holded the btc not longer than one year.
If holded longer than one year, it is tax free.

In alot of other countries it is very similar, except that holding more than one year will only make tax cheaper, not tax free.

How is it in UK ?
And more important:
Is every regular bitcointrader commercial, so has to make a company?! Cause I was told in UK for "Daytrading" and also "active asset management" you need a company.

edit:
sry if this is wrong section. The bitcoin/legal section was hidden for some reason, so I thought Economics does more fit than altcoin and trading discussion Cheesy

edit2:
SOLVED:
https://bitcointalk.org/index.php?topic=1965416.msg19571753#msg19571753

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warrior333
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June 13, 2017, 06:00:48 PM
 #2

In my country bitcoin is not in any way regulated by law. It is still not recognized so no taxes to pay, but once you change the currency further actions fall under the tax base.
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June 13, 2017, 06:24:41 PM
 #3

You can read about it on the government's website.

In the UK, Bitcoin is basically treated as a commodity which is subject to VAT, and to capital gains tax when converted to fiat.

HMRC are pretty incompetent though, and they couldn't catch a cold.  If you withdraw a large amount to a bank you might have to declare it.

Serpens66
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June 13, 2017, 06:25:45 PM
 #4

You can read about it on the government's website.

In the UK, Bitcoin is basically treated as a commodity which is subject to VAT, and to capital gains tax when converted to fiat.

HMRC are pretty incompetent though, and they couldn't catch a cold.  If you withdraw a large amount to a bank you might have to declare it.
thank you.
VAT, really??
That would mean that there is not a single bitcointrader in whole UK, since everyone would make losses just because of VAT? Cheesy
(buying a btc for 1000€ and selling it for 1010€, would still be a loss when you have to pay VAT on buying and on selling)

edit:
Just read one sentence in this article:
Quote
As an EU tax, the VAT treatment for cryptocurrencies adopted by the UK must be consistent with any treatment that may eventually be implemented across the EU.
Since EU said there is no VAT on bitcoin, I think UK also says there is no VAT now, right? The article is quite old, 3 March 2014 , while the VAT decision was at 22 November 2015

Mit Cointracking behältst du die Übersicht über all deine Trades und Gewinne. Sogar ein Tool für die Steuer ist dabei Wink
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Für instant Handel auch am Wochenende bei bitcoin.de sollte man das Fidorkonto verwenden Smiley FAQ Ref-Link: Registrieren
canvan
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June 13, 2017, 06:31:24 PM
 #5

You can read about it on the government's website.

In the UK, Bitcoin is basically treated as a commodity which is subject to VAT, and to capital gains tax when converted to fiat.

HMRC are pretty incompetent though, and they couldn't catch a cold.  If you withdraw a large amount to a bank you might have to declare it.

It doesn't say that you have to pay VAT on your bitcoin, it says if you buy and sell goods and services using bitcoin you have to pay VAT.

Capital gains tax is the only relevant one.

OP read the article.
Serpens66
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June 13, 2017, 06:39:52 PM
 #6

You can read about it on the government's website.

In the UK, Bitcoin is basically treated as a commodity which is subject to VAT, and to capital gains tax when converted to fiat.

HMRC are pretty incompetent though, and they couldn't catch a cold.  If you withdraw a large amount to a bank you might have to declare it.

It doesn't say that you have to pay VAT on your bitcoin, it says if you buy and sell goods and services using bitcoin you have to pay VAT.

Capital gains tax is the only relevant one.

OP read the article.
thanks for clarifying.

So the only relevant part is this: ?
Quote
Chargeable gains: CT and CGT - if a profit or loss on a currency contract is not within trading profits or otherwise within the loan relationship rules, it would normally be taxable as a chargeable gain or allowable as a loss for CT or CGT purposes. Gains and losses incurred on Bitcoin or other cryptocurrencies are chargeable or allowable for CGT if they accrue to an individual or, for CT on chargeable gains if they accrue to a company.

Okay, capital gains.

What about forcing you to be a company? If daytrading and private active asset management needs a company, I would expect that also bitcoin-daytrading would need a company. Or is it not true?

Mit Cointracking behältst du die Übersicht über all deine Trades und Gewinne. Sogar ein Tool für die Steuer ist dabei Wink
Testen ist kostenlos und mit dem obigen Link bekommst du 10% Rabatt auf die kostenpflichtigen Pakete. Thread                                        Great Freeware Game: Clonk Rage
Für instant Handel auch am Wochenende bei bitcoin.de sollte man das Fidorkonto verwenden Smiley FAQ Ref-Link: Registrieren
canvan
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June 13, 2017, 07:11:20 PM
 #7

You can read about it on the government's website.

In the UK, Bitcoin is basically treated as a commodity which is subject to VAT, and to capital gains tax when converted to fiat.

HMRC are pretty incompetent though, and they couldn't catch a cold.  If you withdraw a large amount to a bank you might have to declare it.

It doesn't say that you have to pay VAT on your bitcoin, it says if you buy and sell goods and services using bitcoin you have to pay VAT.

Capital gains tax is the only relevant one.

OP read the article.
thanks for clarifying.

So the only relevant part is this: ?
Quote
Chargeable gains: CT and CGT - if a profit or loss on a currency contract is not within trading profits or otherwise within the loan relationship rules, it would normally be taxable as a chargeable gain or allowable as a loss for CT or CGT purposes. Gains and losses incurred on Bitcoin or other cryptocurrencies are chargeable or allowable for CGT if they accrue to an individual or, for CT on chargeable gains if they accrue to a company.

Okay, capital gains.

What about forcing you to be a company? If daytrading and private active asset management needs a company, I would expect that also bitcoin-daytrading would need a company. Or is it not true?

You can daytrade in the stock market without needing a company so I don't think you would need one for bitcoin. Sorry I don't have that much knowledge personally.
javalemcgee
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June 13, 2017, 08:14:27 PM
 #8

WTF is that? This is bitcoin guys remember, decentralized and cannot be control by any group or government. Not taxable!

If you still pay tax for this, you're stupid. Clearly.
Serpens66
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June 13, 2017, 08:15:14 PM
 #9

You can daytrade in the stock market without needing a company so I don't think you would need one for bitcoin. Sorry I don't have that much knowledge personally.
thanks.

A tax accountant told me that for bitcoin trading in UK I most likey need a company, since daytrading and private asset management would also be considered being commercial (is commercial the right word?)
But unfortunately most tax accountants don't know much about bitcoin and are even telling wrong stuff. That's why I would like to hear general opinion here.
Can't imagine that regular bitcointraders in UK all have a company Cheesy

@javalemcgee:
Sry but I don't want to go to jail because of this...

Mit Cointracking behältst du die Übersicht über all deine Trades und Gewinne. Sogar ein Tool für die Steuer ist dabei Wink
Testen ist kostenlos und mit dem obigen Link bekommst du 10% Rabatt auf die kostenpflichtigen Pakete. Thread                                        Great Freeware Game: Clonk Rage
Für instant Handel auch am Wochenende bei bitcoin.de sollte man das Fidorkonto verwenden Smiley FAQ Ref-Link: Registrieren
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June 14, 2017, 06:58:08 PM
 #10

Not sure about the United Kingdom as they still follow the European Union rules when it comes to finance, but in most countries, bitcoin is not taxed as it is not recognized as a currency in the first place.

But, the moment you convert your bitcoin to any accepted currency, you need to pay tax on it as it is considered to be an income in the recognized currency.

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spngebob
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June 14, 2017, 07:23:39 PM
 #11

WTF is that? This is bitcoin guys remember, decentralized and cannot be control by any group or government. Not taxable!

If you still pay tax for this, you're stupid. Clearly.
I think OP is talking about exchanging bitcoins in real money.
Bitcoin itself is not taxable, but when you exchange it to money and withdraw it to your bank account, i am sure you have to pay tax.
 
If you buy a house i am sure they will ask you to prove where money came from. You can't really say to them "go fck yourself, bitcoin is decentralized and you cant' control it"  Grin
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June 14, 2017, 07:50:48 PM
 #12

if your turnover is over x/year, you'd have to form a company or sole tradership and tell the HMRC about that
as to whether you need some sort of money transmitter license, probably nobody knows, even the relevant regulatory body
(in USA they're always prosecuting traders for no money transmitter license)
ask here https://bitcointalk.org/index.php?board=8.0
see if you can't get in touch with head of Localbitcoins UK for advice
I'm sure there are uk lawyers who know sth re crypto
write to the Minister for his opinion - a 'note from Stalin' keeps the police away


if you go ahead in the open, with permissions etc, you must still keep your bank out of the picture and never mention the word 'bitcoin'. someone will just get spooked and freeze your account to be on the safe side or vindictively

I do not accept segwit outputs as payment, nor send them.
~14 easy tricks to save your bitcoin http://trilema.com/2013/how-to-airgap-a-practical-guide/ The auditable hardware RNG http://nosuchlabs.com/
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June 14, 2017, 08:12:29 PM
 #13

In my country bitcoin is not in any way regulated by law. It is still not recognized so no taxes to pay, but once you change the currency further actions fall under the tax base.
As I know Bitcoin profit is not admited in any country yet, so there is no taxes from this kind of earnings. I am from Russia and I heard here in the project national crypto currency. I think when this project will be realise all citizens will have to pay that kind of tax from their crypto profit.

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Serpens66
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June 14, 2017, 09:20:41 PM
 #14

if your turnover is over x/year, you'd have to form a company or sole tradership and tell the HMRC about that
as to whether you need some sort of money transmitter license, probably nobody knows, even the relevant regulatory body
(in USA they're always prosecuting traders for no money transmitter license)
ask here https://bitcointalk.org/index.php?board=8.0
see if you can't get in touch with head of Localbitcoins UK for advice
I'm sure there are uk lawyers who know sth re crypto
write to the Minister for his opinion - a 'note from Stalin' keeps the police away

if you go ahead in the open, with permissions etc, you must still keep your bank out of the picture and never mention the word 'bitcoin'. someone will just get spooked and freeze your account to be on the safe side or vindictively

Thank you very much.
I can imagine that when doing localbitcoin trades or any trades that are not on an exchange (like bitstamp, bitfinex, kraken and so on), goverment can argue that you need money transmitter licencse+company (that's why localbitcoins is blocked in germany).

But do you have sources if a company is also needed when trading high volume at exchanges mentioned above? No localbitcoins, no private trades and only trading with own money and not for third parties. If this would need a company too, nearly every single bitcointrader would be affected.
Where could I get information like this?
The problem is that I need a 100% legal answer to this question... and even most tax accountants are not able to answer this, since they don't know bitcoin.


As I know Bitcoin profit is not admited in any country yet, so there is no taxes from this kind of earnings. I am from Russia and I heard here in the project national crypto currency. I think when this project will be realise all citizens will have to pay that kind of tax from their crypto profit.
In most countries you have to pay taxes on profits you make through bitcoin, even if it is not regulated. The kind of tax differs and there are even countries without tax on profits.

Mit Cointracking behältst du die Übersicht über all deine Trades und Gewinne. Sogar ein Tool für die Steuer ist dabei Wink
Testen ist kostenlos und mit dem obigen Link bekommst du 10% Rabatt auf die kostenpflichtigen Pakete. Thread                                        Great Freeware Game: Clonk Rage
Für instant Handel auch am Wochenende bei bitcoin.de sollte man das Fidorkonto verwenden Smiley FAQ Ref-Link: Registrieren
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June 14, 2017, 09:51:08 PM
 #15

In my country bitcoin is not in any way regulated by law. It is still not recognized so no taxes to pay, but once you change the currency further actions fall under the tax base.
Does it mean that you are not supposed to pay taxes if that is not regulated by law in your country,i thought you should file those incomes while filing for your taxes annually,i am yet to file my taxes for the bitcoin returns because i am yet to sell my major share of coins and when i do that i will be thinking about that because i do not want the government to come knocking my doors.


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Last of the V8s
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June 14, 2017, 10:17:15 PM
 #16

Ah ok.
lots to read here:
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
https://www.gov.uk/government/organisations/hm-revenue-customs/services-information
https://www.gov.uk/capital-gains-tax-businesses 'You pay Capital Gains Tax if you’re a self-employed sole trader or in a business partnership. Other organisations like limited companies pay Corporation Tax on profits from selling their assets.' seems that part is up to you
pretty sure you can request an interview with an HMRC agent to thrash things out
to reiterate, in UK you don't have to start a company, just to declare yourself a sole trader

I do not accept segwit outputs as payment, nor send them.
~14 easy tricks to save your bitcoin http://trilema.com/2013/how-to-airgap-a-practical-guide/ The auditable hardware RNG http://nosuchlabs.com/
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June 15, 2017, 01:58:07 AM
 #17

Ah ok.
lots to read here:
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
https://www.gov.uk/government/organisations/hm-revenue-customs/services-information
https://www.gov.uk/capital-gains-tax-businesses 'You pay Capital Gains Tax if you’re a self-employed sole trader or in a business partnership. Other organisations like limited companies pay Corporation Tax on profits from selling their assets.' seems that part is up to you
pretty sure you can request an interview with an HMRC agent to thrash things out
to reiterate, in UK you don't have to start a company, just to declare yourself a sole trader
Thanks, but as far as I can see there is no informatin about "company" or not ?
By company I mean everything that is commercial. I just wasn't sure if commercial is the right word to use, since english is not my native language.
I guess a sole trader is also commercial?

Where to contact someone who can clearly tell me if my trading is commercial or not?

The plan:
If I move to UK, I have the Non-Dom status (same for Ireland and Malta)
And as such I don't have to pay taxes on income from foreign countries. Since most exchanges are not based in UK, the profits would be tax free.
But there are exceptions. If I trade commercial, the profit is not tax free. Daytrading and private active asset managent is defined commercial in this case.
So the question now is, if bitcointrading is also commercial, when just trading on exchanges.

Mit Cointracking behältst du die Übersicht über all deine Trades und Gewinne. Sogar ein Tool für die Steuer ist dabei Wink
Testen ist kostenlos und mit dem obigen Link bekommst du 10% Rabatt auf die kostenpflichtigen Pakete. Thread                                        Great Freeware Game: Clonk Rage
Für instant Handel auch am Wochenende bei bitcoin.de sollte man das Fidorkonto verwenden Smiley FAQ Ref-Link: Registrieren
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June 15, 2017, 07:20:16 AM
 #18

Ah ok.
lots to read here:
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
https://www.gov.uk/government/organisations/hm-revenue-customs/services-information
https://www.gov.uk/capital-gains-tax-businesses 'You pay Capital Gains Tax if you’re a self-employed sole trader or in a business partnership. Other organisations like limited companies pay Corporation Tax on profits from selling their assets.' seems that part is up to you
pretty sure you can request an interview with an HMRC agent to thrash things out
to reiterate, in UK you don't have to start a company, just to declare yourself a sole trader
Thanks, but as far as I can see there is no informatin about "company" or not ?
By company I mean everything that is commercial. I just wasn't sure if commercial is the right word to use, since english is not my native language.
I guess a sole trader is also commercial?

Where to contact someone who can clearly tell me if my trading is commercial or not?

The plan:
If I move to UK, I have the Non-Dom status (same for Ireland and Malta)
And as such I don't have to pay taxes on income from foreign countries. Since most exchanges are not based in UK, the profits would be tax free.
But there are exceptions. If I trade commercial, the profit is not tax free. Daytrading and private active asset managent is defined commercial in this case.
So the question now is, if bitcointrading is also commercial, when just trading on exchanges.
sole trader is commercial. the rule will be somewhere on that site
British Embassy in capital city or Consulate in smaller cities
your visa status may change due to brexit negotiations. ask the consul about this
i'd guess you have to consider yourself commercial and declare yourself to HMRC once your annual turnover exceeds a certain amt (£80k? approx)
again, that will be on the .gov.uk site

I do not accept segwit outputs as payment, nor send them.
~14 easy tricks to save your bitcoin http://trilema.com/2013/how-to-airgap-a-practical-guide/ The auditable hardware RNG http://nosuchlabs.com/
Serpens66
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June 15, 2017, 08:40:39 AM
 #19

sole trader is commercial. the rule will be somewhere on that site
British Embassy in capital city or Consulate in smaller cities
your visa status may change due to brexit negotiations. ask the consul about this
i'd guess you have to consider yourself commercial and declare yourself to HMRC once your annual turnover exceeds a certain amt (£80k? approx)
again, that will be on the .gov.uk site


Thank you very much. I did not see that I could contact someone at the website.

I just called these one:
https://www.gov.uk/government/organisations/hm-revenue-customs/contact/capital-gains-tax-enquiries-for-individuals-employees-and-self-employed

And they confirmed that capital gains tax is to pay, even if I'm Non-Dom, cause it is not "foreign income", even if it is traded on exchanges outside of UK, cause instead they are looking where the person who is trading has his residance, which would be UK -> taxed.
But no company or any commercial thing needed, at least they did not tell me about it.

Question solved.

Mit Cointracking behältst du die Übersicht über all deine Trades und Gewinne. Sogar ein Tool für die Steuer ist dabei Wink
Testen ist kostenlos und mit dem obigen Link bekommst du 10% Rabatt auf die kostenpflichtigen Pakete. Thread                                        Great Freeware Game: Clonk Rage
Für instant Handel auch am Wochenende bei bitcoin.de sollte man das Fidorkonto verwenden Smiley FAQ Ref-Link: Registrieren
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June 15, 2017, 08:58:00 AM
 #20

Great stuff
more material
https://www.gov.uk/set-up-sole-trader
https://www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return

wish you the best of British luck

whereabouts are you looking to move to?

I do not accept segwit outputs as payment, nor send them.
~14 easy tricks to save your bitcoin http://trilema.com/2013/how-to-airgap-a-practical-guide/ The auditable hardware RNG http://nosuchlabs.com/
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