HMRC publishes detailed policy paper on crypto taxation. Shows impressive understanding of the fast moving tech and industry complexity.
Papers goes into detail on tax implications of Airdrops/Mining/Forks/Lost Keys and more.
They clearly haven't done their homework. Four years since they classified crypto as an asset for tax purposes I was expecting the guidance to understand the nuance of this space. Instead they still clearly haven't done any research. Or they are deliberately adding maximum friction to the frictionless value transfer technology in order to suppress innovation.
I came to the opposite conclusion. Crypto is a commodity - just like salt, coal or grain. It's a part of a network infrastructure resource in that if you hold some Dash/Bitcoin, nobody else has the use of it. So it's definitely a commodity, not a currency.
Also, it can go up and down in terms of purchasing power. I think the HMRC document is one of the most grown-up tax treatments I've ever seen in that they acknowledge that it's the OFF-CHAIN nature of the use of that commodity that determines the tax treatment.
Sorry, I would have to disagree with that statement. If I hold a $10 bill in my wallet then no one has the use of that either.
From Google - "A commodity is an item that is traded on the market, such as wheat, gold, silver, oil, coffee, or sugar." .... By this rational then the USD, EUR, GBP, Treasury Bonds etc are also all commodities.
"Economists, however, have a language all their own when it comes to money. They define it as something that serves as a medium of exchange, a unit of accounting, and a store of value. Money is a medium of exchange in the sense that we all agree to accept it in making transactions." .... USD and DASH both fit these descriptions.
They're just trying to make sure they get a piece of the pie after they've printed so much funny money to buy assets causing everything to be priced in that funny money to increase in terms of that funny money.
It's just a money grab mate, can't you see that? We're taxed on everything multiple times in the UK and people have been so brainwashed all their lives into just accepting such things like this, never even questioning it or thinking outside the box and believe such laws are right and just.
They really have no business in anyone's business but they ensure they make it theirs or use force. Governments and local councils do whatever they want and the people never fight back.
Fine if you are just speculating on exchanges where you can figure out your taxes. If you are actually using crypto utility tokens you can be doing hundreds of small transactions a day across multiple dapps, games and different blockchains. That will keep rising to doing thousands of transactions a day mostly entirely passive with no actual human involvement. Then when the masses arrives that's millions of people who will all need their own accountants spending thousands of man hours to figure out exactly what is taxable, what the fiat value is at the time of transaction, and what is just moving funds around. It clearly doesn't scale to apply commodity tax regulation to crypto. This tax guidance has no chance of standing the test of time.
Unfortunately the stance of applying cgt to crypto renders its use as money useless. If you buy a coffee its considered the disposal of an asset and you will have to pay 20% on the price of the coffee.
Most jurisdictions not just the UK are applying this and it really needs challenging.
I agree, it's ridiculous unless you're making a very expensive purchase like a car or a house. Otherwise it's basically unenforceable - how is HMRC going to know about all your tiny purchases with crypto?
Victoria bought 100 token A for £1,000. A year later Victoria bought a further 50 token A for £125,000. Victoria is treated as having a single pool of 150 of token A and total allowable costs of £126,000.
A few years later Victoria sells 50 of her token A for £300,000. Victoria will be allowed to deduct a proportion of the pooled allowable costs when working out her gain:
I'm totally screwed by this news. made gains in 2017 from moving coins about to avoid pump and dumps but then was in significant downturn in 2018, so I'm paying tax on gains but technical ly made losses overall, so I'm paying tax to hold losing assets!
Well, looks like the UK is setting itself up to not only loose the traditional financial lead (because of Brexit), but the future financial oppertunities as well. Too bad for them. In a few years Switzerland will have increased its wealth lead in Europe even more than today.
So, I read this earlier and it wasn’t all that clear. Does this mean if you sell and make £11700, you pay capital gains. If you trade (so, sell back to the exchange) you pay income tax if you make over £11850 you pay income tax?
Provided you didn’t make any other capital gains in the year you won’t have any tax to pay.
If your sale proceeds exceed 4 times the annual exempt amount (so, £46,800) you’d need to report it regardless of the size of the gain. Otherwise, no reporting is required.
As long as its part of your entire cgt limit for the year, no need to worry. Dont mean to be pedantic but its not a single trade, its all of your trades/sells in the tax year including other non-crypto related gains.
You pay an accountant to advise you.
Most likely, you set your acquisition cost to 0 from the first day that you do have records, and so help you god, you start keeping meticulous records of your financial activity from now on.