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Author Topic: Official cryptocurrency thread (Bitcoin, Ethereum, Altcoin)  (Read 302044 times)
Doobs
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« Reply #345 on: November 19, 2017, 11:33:10 AM »

It was a serious question to Dave about tax.   I have been self employed/run companies for 15 years or so, there is a good chance I could get away with paying less tax, but I am pretty good with it.  We get a good deal tax wise when compared with a lot of people who are quite a bit poorer, so I try and do the right thing.  Been able to get away with it seems bad reasoning.               

I've no doubt you pay a fair share of taxes, I wasn't suggesting not to pay taxes on BTC profits, the main point in my post was just directly passing advice from my accountant who said if you do liquidise a large amount of money from BTC then defo declare something otherwise you might end up having HMRC do the calcs for you and with such an unpredictable thing as BTC you're very likely to end up being hugely screwed over.

His suggestion, which I think is a good one, is to be completely honest about your BTC profits and just use any legitimate methods to reduce your tax exposure, that way you are paying slightly less taxes but still operating in the bounds of the tax law.

Obviously people should all want to pay their taxes without needing the risk of a fine to encourage them, but this isn't a ethic discussion its a crypto currency discussion.


Could you set BTC losses against your tax bill?

You can offset capital losses against capital gains elsewhere.  Maybe this is a better question for crytpto investors going forward? 
   
I don't think you can do it against income.  I think traders in shares used to get treated differently, though I have no idea if this is still true.  So if your job was bitcoin trader, then there  may be a difference.  I am not a tax man, so don't take this paragraph as gospel. 
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SuuPRlim
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« Reply #346 on: November 19, 2017, 12:04:33 PM »

It was a serious question to Dave about tax.   I have been self employed/run companies for 15 years or so, there is a good chance I could get away with paying less tax, but I am pretty good with it.  We get a good deal tax wise when compared with a lot of people who are quite a bit poorer, so I try and do the right thing.  Been able to get away with it seems bad reasoning.               

I've no doubt you pay a fair share of taxes, I wasn't suggesting not to pay taxes on BTC profits, the main point in my post was just directly passing advice from my accountant who said if you do liquidise a large amount of money from BTC then defo declare something otherwise you might end up having HMRC do the calcs for you and with such an unpredictable thing as BTC you're very likely to end up being hugely screwed over.

His suggestion, which I think is a good one, is to be completely honest about your BTC profits and just use any legitimate methods to reduce your tax exposure, that way you are paying slightly less taxes but still operating in the bounds of the tax law.

Obviously people should all want to pay their taxes without needing the risk of a fine to encourage them, but this isn't a ethic discussion its a crypto currency discussion.


Could you set BTC losses against your tax bill?

No.
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Doobs
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« Reply #347 on: November 19, 2017, 12:39:20 PM »

It was a serious question to Dave about tax.   I have been self employed/run companies for 15 years or so, there is a good chance I could get away with paying less tax, but I am pretty good with it.  We get a good deal tax wise when compared with a lot of people who are quite a bit poorer, so I try and do the right thing.  Been able to get away with it seems bad reasoning.               

I've no doubt you pay a fair share of taxes, I wasn't suggesting not to pay taxes on BTC profits, the main point in my post was just directly passing advice from my accountant who said if you do liquidise a large amount of money from BTC then defo declare something otherwise you might end up having HMRC do the calcs for you and with such an unpredictable thing as BTC you're very likely to end up being hugely screwed over.

His suggestion, which I think is a good one, is to be completely honest about your BTC profits and just use any legitimate methods to reduce your tax exposure, that way you are paying slightly less taxes but still operating in the bounds of the tax law.

Obviously people should all want to pay their taxes without needing the risk of a fine to encourage them, but this isn't a ethic discussion its a crypto currency discussion.


Could you set BTC losses against your tax bill?

No.

https://www.gov.uk/capital-gains-tax/losses

You can report losses on a chargeable asset to HM Revenue and Customs (HMRC) to reduce your total taxable gains.

Losses used in this way are called ‘allowable losses’.
Using losses to reduce your gain
When you report a loss, the amount is deducted from the gains you made in the same tax year.

If your total taxable gain is still above the tax-free allowance, you can deduct unused losses from previous tax years. If they reduce your gain to the tax-free allowance, you can carry forward the remaining losses to a future tax year.

Reporting losses
Claim for your loss by including it on your tax return. If you’ve never made a gain and aren’t registered for Self Assessment, you can write to HMRC instead.

You don’t have to report losses straight away - you can claim up to 4 years after the end of the tax year that you disposed of the asset.


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acegooner
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« Reply #348 on: November 20, 2017, 07:50:04 AM »

Hypothetically speaking if I cashout x amount of bitcoin from a poker site, the bitcoin increases by y amount in value so that capital gains tax would need to be enforced, but I also use that bitcoin to play poker on various other sites where I win/lose z amount, is there any way for the IRS to prove that I have to pay CGT on the bitcoins I have held? So for example I withdraw $100k worth of BTC to my exchange, I redeposit $70k of that, lose $20k but the $30k I have in the exchange increases in value by $10k does that qualify? Is there any way for the IRS to prove this? Are they in contact with the exchanges?

I would say you only pay cgt on assets held in a wallet on an exchange. As soon as you deposit into the poker site it's no different to purchasing a loaf of bread. Even though you could lose half your roll while playng poker, if BTC doubles you have effectively parred your losses.

In saying that the US tax system is totally different to the UK so you would really need to clarify this with an accountant over there.

If there is a poker site that accepts American players into an international player pool please spill the beans. I miss playing the Americans and I was a raging fish back then so feel as though I missed out!

I had lunch with my accountant recently, and he said bitcoin and tax was super simple, like you say CGT fully applies. Also you don't pay capital gains tax until you turn them into cash, if you bought 100 bitcoins for $10k and now they are woth $800k - there is no CGT due until you turn them into money, even if they are worth $100k a coin, there's no CGT due until you sell one as its not technically considered as money in the govt eyes.

Also there is 0% chance that HMRC or any Govt revenue service will be able to see your crypto wallets even on exchanges, contray to popular belief without cause to do so they cant even look in your bank account. No way to prove what you paid for them I think you can probably just fill out a tax return with a believable capital gain # and they'd have to take your word for it, they'd probably just be jolly happy someone volunteered some tax on it, certainly isn;t worth them investigating, all you wanna do if you're taking a big number out of BTC is prevent a spot where they do investigate you and you risk them making some assumptions about your capital gains from BTC which might end up being aggressive and there's not a lot you can do about that with the nature of BTC.

Your accountant is missing one huge issue here. Whilst the assets are stored in a wallet, yes I agree there's no way of HMRC picking up on this.

However, practically speaking there's not much you can buy with BTC at present, so the only way of utilising your gain is to sell your BTC and covert back into GBP. If you have made a small gain it's going to fall within the annual CGT allowance, but if you have made a large gain and all of a sudden tens of thousands even hundreds of thousands of pounds hits your bank account all sorts of money laundering alarm bells will be triggered.

Somewhere along the line you will have to explain the source of your wealth. As soon as that happens expect government agencies including HMRC to come into the fold.

It is quite surprising an accountant misses the Money Laundering issues that can associate themselves with holding and realising cryptocurrency. Certainly in my time working for an accountancy firm in London they took their ML reporting obligations very seriously.

One good thing for the future though, there are a number of providers who are looking to offer BTC ETFs, which mean that you will soon be able to track the upside (or crash) of the currency in a tax free wrapper such as an  ISA or a SIPP. Indeed Hargreaves Lansdown already offers Bitcoin trackers, albeit in Euros rather than GBP.

http://www.hl.co.uk/shares/shares-search-results/x/xbt-provider-ab-bitcoin-tracker-eur

We are getting towards the final stages of the bull run, BTC is mentioned every day on Bloomberg which brings more people to the party. It's not a question of if but when the biggest crash in the history of any asset class happens imo.
« Last Edit: November 20, 2017, 08:19:03 AM by acegooner » Logged
lucky_scrote
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« Reply #349 on: November 21, 2017, 12:04:22 AM »

https://www.reddit.com/r/UKPersonalFinance/comments/7eajtj/paying_the_minimum_capital_gains_on_btc/

Let's say last april I bought 25k worth of bitcoin which is now worth 25k. Would I have to manually let hmrc know that my net result is £0 (despite having bitcoin left)?

I do actually agree that this bull run will end in tears for many. I do think we have a little while yet though.
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acegooner
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« Reply #350 on: November 21, 2017, 05:09:43 AM »

https://www.reddit.com/r/UKPersonalFinance/comments/7eajtj/paying_the_minimum_capital_gains_on_btc/

Let's say last april I bought 25k worth of bitcoin which is now worth 25k. Would I have to manually let hmrc know that my net result is £0 (despite having bitcoin left)?

I do actually agree that this bull run will end in tears for many. I do think we have a little while yet though.

If the gain is lower than the annual CGT allowance no reporting is required. If it is more you can either make an individual capital gains declaration or declare it through self assessment. The easiest way is just to include it in your annual SA return.

https://www.gov.uk/capital-gains-tax/rates

The amount you pay will depend on whether you are a basic or higher rate taxpayer. Given the returns on cryptocurremcies this year, holding a modest amount of ethereum could result in a 20% tax bill on part of the profit if say you bought £5k worth @ $10. The tax is only calculated on realisation, there is no liability for buying/holding cryptocuurencies There are loads of cgt calculators all over the internet including the governments official website.

Personally I would take what's said on Reddit with a pinch of salt someone has referred to tax rates of 18/28% for CGT. Those rates only apply from for the disposal of property other than your main private residence.

My comments relate to a disposal of assets not mining for coins btw.

Check out an AIM listed company called ONL, they are a tech incubator who are about to change their name to Blockchain PLC. I purchased a small amount on Friday, the share price has rocketed over the last two days. They have plans for an ICO, a total punt on my part but my portfolio has become very concentrated around a few investments so sold some other assets to diversify, and I like the thought of effectively employing a company that understands blockchain better than I do. If it goes belly up so be it. It's less than .5% of all my Portfolio and I won't pay any tax on profits.

Still waiting for BTC to crash though......
« Last Edit: November 21, 2017, 05:27:21 AM by acegooner » Logged
Doobs
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« Reply #351 on: November 21, 2017, 08:32:24 AM »

https://www.reddit.com/r/UKPersonalFinance/comments/7eajtj/paying_the_minimum_capital_gains_on_btc/

Let's say last april I bought 25k worth of bitcoin which is now worth 25k. Would I have to manually let hmrc know that my net result is £0 (despite having bitcoin left)?

I do actually agree that this bull run will end in tears for many. I do think we have a little while yet though.

If the gain is lower than the annual CGT allowance no reporting is required. If it is more you can either make an individual capital gains declaration or declare it through self assessment. The easiest way is just to include it in your annual SA return.

https://www.gov.uk/capital-gains-tax/rates

The amount you pay will depend on whether you are a basic or higher rate taxpayer. Given the returns on cryptocurremcies this year, holding a modest amount of ethereum could result in a 20% tax bill on part of the profit if say you bought £5k worth @ $10. The tax is only calculated on realisation, there is no liability for buying/holding cryptocuurencies There are loads of cgt calculators all over the internet including the governments official website.

Personally I would take what's said on Reddit with a pinch of salt someone has referred to tax rates of 18/28% for CGT. Those rates only apply from for the disposal of property other than your main private residence.

My comments relate to a disposal of assets not mining for coins btw.

Check out an AIM listed company called ONL, they are a tech incubator who are about to change their name to Blockchain PLC. I purchased a small amount on Friday, the share price has rocketed over the last two days. They have plans for an ICO, a total punt on my part but my portfolio has become very concentrated around a few investments so sold some other assets to diversify, and I like the thought of effectively employing a company that understands blockchain better than I do. If it goes belly up so be it. It's less than .5% of all my Portfolio and I won't pay any tax on profits.

Still waiting for BTC to crash though......


I have just browsed their accounts and that company doesn't look great.   They have low turnover, have profits that are really tiny, and their accumulated losses dwarf both figures.  As does their market cap.  Given their relationship to advfn, I'd be pretty worried about balance on thier boards too, not that it ever existed there for any company.

But they are adding blockchain to their name and planning an ICO of which we know pretty much nothing about...

I think Bitcoin looks more appealing.

edit.  Their sole invesment is an 18% stake in ADVFN, a company with 214,000 turnover and a market cap of 1.8m.   Online has a market cap of £6m, but has an idea for a "blockchain based product to support financial website's users' ratings of information contributions using token based contributions".   That idea is priced by the market at £5.5m it serms.  The idea is only going to be tested in early 2018.

got to work.
« Last Edit: November 21, 2017, 08:56:17 AM by Doobs » Logged

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« Reply #352 on: November 21, 2017, 09:01:47 AM »


You should be okay here for the time being!!! with the largest derivatives exchange in the world CME starting to trial run a BTC futures market from today

With the hope of bringing to the full exchange mid December

The question is how much institutional money is sat on the sidelines waiting
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« Reply #353 on: November 22, 2017, 11:26:05 AM »

Your accountant is missing one huge issue here.
...
It is quite surprising an accountant misses the Money Laundering issues that can associate themselves with holding and realising cryptocurrency. 

Unless I missed something I think he covered them perfectly, cliffs of the advice I got was this;

1) 100% CGT
2) CGT not applicable until its becomes cash, govt not classing BTC as currency
3) Anything you can buy with BTC before you liquidise is a very easy, totally legal tax efficiency. Not talking about buying tables or cars etc, mostly he was referring to me settling gambling credit balances
4) Do not just not declare as you run the risk of HMRC calculating on your behalf.
5) Once it becomes CASH, in the UK, then it needs to be declared.



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« Reply #354 on: November 24, 2017, 07:09:01 PM »

Your accountant is missing one huge issue here.
...
It is quite surprising an accountant misses the Money Laundering issues that can associate themselves with holding and realising cryptocurrency. 

Unless I missed something I think he covered them perfectly, cliffs of the advice I got was this;

1) 100% CGT
2) CGT not applicable until its becomes cash, govt not classing BTC as currency
3) Anything you can buy with BTC before you liquidise is a very easy, totally legal tax efficiency. Not talking about buying tables or cars etc, mostly he was referring to me settling gambling credit balances
4) Do not just not declare as you run the risk of HMRC calculating on your behalf.
5) Once it becomes CASH, in the UK, then it needs to be declared.





Looking at your original post, you have said that there is no way of HMRC finding out how much you paid for the asset. I disagree, you will have transferred GBP into your wallet before you invested and if the realised amount is an inordinate amount of money you could well be flagged up for investigation. Especially if in relation to your other income the amount realised is a significant amount of money.

The Financial Conduct Authority (FCA) requires banks to have "adequate policies and procedures sufficient to counter the risk that they might be used to further financial crime". In addition, banks must "identify and monitor customer relationships". In effect, this is a requirement for banks to "know their customers" and be confident they are not using accounts to receive the proceeds of crime.

There is no specific limit on cash receipts imposed by the FCA. So the attitude of the banks will depend on their prior knowledge of you.

In the same way, if you are hiring an accountant and they are not observing these regulations, when they are doing a tax return for you then they are not following ML rules that they should be very familiar with.

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« Reply #355 on: November 25, 2017, 12:13:19 PM »

Your accountant is missing one huge issue here.
...
It is quite surprising an accountant misses the Money Laundering issues that can associate themselves with holding and realising cryptocurrency. 

Unless I missed something I think he covered them perfectly, cliffs of the advice I got was this;

1) 100% CGT
2) CGT not applicable until its becomes cash, govt not classing BTC as currency
3) Anything you can buy with BTC before you liquidise is a very easy, totally legal tax efficiency. Not talking about buying tables or cars etc, mostly he was referring to me settling gambling credit balances
4) Do not just not declare as you run the risk of HMRC calculating on your behalf.
5) Once it becomes CASH, in the UK, then it needs to be declared.





Looking at your original post, you have said that there is no way of HMRC finding out how much you paid for the asset. I disagree, you will have transferred GBP into your wallet before you invested and if the realised amount is an inordinate amount of money you could well be flagged up for investigation. Especially if in relation to your other income the amount realised is a significant amount of money.

The Financial Conduct Authority (FCA) requires banks to have "adequate policies and procedures sufficient to counter the risk that they might be used to further financial crime". In addition, banks must "identify and monitor customer relationships". In effect, this is a requirement for banks to "know their customers" and be confident they are not using accounts to receive the proceeds of crime.

There is no specific limit on cash receipts imposed by the FCA. So the attitude of the banks will depend on their prior knowledge of you.

In the same way, if you are hiring an accountant and they are not observing these regulations, when they are doing a tax return for you then they are not following ML rules that they should be very familiar with.



I've never actually bought any bitcoin, never deposited on an exchange or had money from my bank go into an exchange. I've received them from poker sites as cashouts, held them to play in bitcoin fractional and redeposited back to be converted to USD and back to bitcoin or transferred them from person to person. I think this is what Dave was getting at in his original reply to me.
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SuuPRlim
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« Reply #356 on: November 25, 2017, 05:56:00 PM »

Your accountant is missing one huge issue here.
...
It is quite surprising an accountant misses the Money Laundering issues that can associate themselves with holding and realising cryptocurrency. 

Unless I missed something I think he covered them perfectly, cliffs of the advice I got was this;

1) 100% CGT
2) CGT not applicable until its becomes cash, govt not classing BTC as currency
3) Anything you can buy with BTC before you liquidise is a very easy, totally legal tax efficiency. Not talking about buying tables or cars etc, mostly he was referring to me settling gambling credit balances
4) Do not just not declare as you run the risk of HMRC calculating on your behalf.
5) Once it becomes CASH, in the UK, then it needs to be declared.





Looking at your original post, you have said that there is no way of HMRC finding out how much you paid for the asset. I disagree, you will have transferred GBP into your wallet before you invested and if the realised amount is an inordinate amount of money you could well be flagged up for investigation. Especially if in relation to your other income the amount realised is a significant amount of money.

The Financial Conduct Authority (FCA) requires banks to have "adequate policies and procedures sufficient to counter the risk that they might be used to further financial crime". In addition, banks must "identify and monitor customer relationships". In effect, this is a requirement for banks to "know their customers" and be confident they are not using accounts to receive the proceeds of crime.

There is no specific limit on cash receipts imposed by the FCA. So the attitude of the banks will depend on their prior knowledge of you.

In the same way, if you are hiring an accountant and they are not observing these regulations, when they are doing a tax return for you then they are not following ML rules that they should be very familiar with.


OK, I've never bought BTC by uploading money into wallets, I actually completely forget that was even an option and when discussing with my accountant that was never suggested as an option. All my btc I bought with either cash that had never been in my bank, or took as payment from people in other countries for stuff, I think the odd one or two I bought off friends in exchange for a bank Xfer but there's loads of reasons I might Xfer them money.

You're right, if you've uploaded money to a wallet then thats a good way of figuring out how much you paid for them, I've also never liquidised them using an exchange I've always done it privately - how it would look being cashed off an exchange or wallet was never discussed and I guess I should have mentioned that before passing on the advice I had.
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« Reply #357 on: November 25, 2017, 05:57:00 PM »

£6500 a coin eh, LETS GET READY TO PAY SOME TAX BOYS Smiley
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« Reply #358 on: November 26, 2017, 08:40:10 AM »

£6500 a coin eh, LETS GET READY TO PAY SOME TAX BOYS Smiley

It's over $9k now, crazy that its gone up over $600 this weekend whilst most of us aren't even thinking about investments. It's so mad you could be a losing poker player and still make money in a site that uses BTC as its default currency. This bull run won't last forever though.
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« Reply #359 on: November 26, 2017, 04:55:07 PM »

So it's been dying recently...

Bubble burst or good time to buy?

The day after this post bitcoin "closed" at $1929.82 Cheesy
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