At the end of 2018, the British tax office published a statement in which it determined the way in which cryptocurrencies are taxed in the UK. In simplified terms, cryptocurrency mining and trading in the UK is subject to taxation under the general rules or capital gains tax. What tax to pay is largely dependent on whether a person trades in cryptocurrencies to make a profit (or loss) on a particular transaction or treats a cryptocurrencies as an investment.
The type of tax to be paid depends on many factors and the form of business activity of the taxpayer. We would also like to point out that our article has an informative function and should not be treated as tax advice. Nevertheless, we have made every effort to present the current situation regarding the settlement of taxes related to cryptocurrency trading in the United Kingdom. In case of any doubts, we encourage you to use the services of accounting offices, which will certainly provide comprehensive information on the status of the tax law in force in the United Kingdom.
Investing in cryptocurrencies – what tax?
Investors in most cases will pay Capital Gains Tax. According to the published documents, the tax on capital gains is to be calculated on the basis of the tax rate.
Investors in most cases will pay Capital Gains Tax. According to the published documents, the tax on capital gains is to be paid on the sale of cryptocurrencies by which one understands:
- sale of crypto and receipt of real currencies in exchange,
- exchange cryptocurrencies for units of others crypto,
- exchange of cryptocurrency for other tangible or intangible goods,
- transfer of cryptocurrencies to third parties (other than life partner).
The rate of capital gains tax in the UK ranges from 10 to 20 per cent. More information about Capital Gains Tax can be found at https://www.gov.uk/capital-gains-tax
Trade on cryptocurrencies in the UK and tax
Persons engaged in typical cryptocurrency trade are obliged to pay income tax. The easiest way to settle Income Tax is to settle under the self-employment rules. Such a solution also allows to include many expenses as tax deductible costs (e.g. purchase of a computer, Internet bills, renting a flat in the UK). In addition, it is also possible to settle your income tax without having to run a self-assessment business. The standard income tax rate in the UK is 20 per cent (tax-free £11850/revenue up to £46350 per year for the 2019/2020 tax year).
How do I buy Bitcoin in the UK?
Indeed, there are many ways to buy Bitcoin. It is enough to have an appropriate wallet on which the virtual currency units will be sent after the purchase. This wallet can be installed on your computer, smartphone or cloud. To make sure that your purchase of Bitcoin is safe, you should use the proven cryptocurrency stock exchanges. One of the most popular cryptocurrencies exchanges in the world is the BitBay exchange. The Polish cryptocurrency exchange has been operating since 2014 and is used by almost one million active users.
The company employs over 200 people and the verification of users guarantees full security of transactions. Recently, the BitBay exchange has made it possible to make deposits in British currency. Such a solution makes it much easier for people who earn in pounds to use the exchange. In order to buy Bitcoins or other cryptocurrencies in the UK, all you need to do is register with the service, make a simple verification and make a deposit. After purchasing your crypto you can store them on the stock exchange or withdraw them to the address of the indicated wallet.
Cryptocurrencies in the UK
To sum up, the crypto market is growing month by month and Bitcoin and other cryptocurrencies in the UK are becoming more and more popular. Trade on cryptocurrencies in the Great Britain is currently not fully regulated, although there are adequate interpretations to allow for proper settlement of taxes. Due to the dynamic changes in the situation, we also encourage you to keep up to date with the information appearing on the website of the British government. On the https://www.gov.uk/government/publications/tax-on-cryptoassets/cryptoassets-for-individuals website you can find a lot of valuable information about regulations in the UK law.