In recent weeks we have had a lot of enquiries from crew asking how tax works with Crypto currency in the UK. We have produced the following guide on it. We must make you aware that due to the fact that this is a very new thing the way that tax is applied may change in the future:
- If you were to buy crypto currency you don't have to declare it until you sell it.
- If you were to receive cryptocurrency as payment for something, it would be valued in GBP for the sake of working out the purchase value (as an asset). Once you sell the cryptocurrency you would again take the GBP value and work out the tax on the gain. You would then work out the purchase value in the same way you would foreign currency, using the GBP amount for calculation purposes.
- If you were to buy something with cryptocurrency you hold already, then you would treat the purchase as if you had sold the cryptocurrency and work out the tax on the gains from the difference in buying and selling price. Again treating the cryptocurrency as you would foreign currency for the GBP value.
- It's worth also mentioning that there's an £11,300 exempt amount per annum for CGT. So if you purchased cryptocurrency for £1,000 and sold it 2 years later for £20,000 you would pay CGT on £7,700 of the gain (20,000- 1,000= 19000 then minus 11,300 exemption).
HMRC are in the very early stages of consultation on this and there will be updates on their website as more information becomes available and it's highly likely we may not hear anything regarding this until the end of the year.
Any advice in this publication is not intended or written by Marine Accounts to be used by a client or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party matters herein.