BITCOIN as an alternative to regular currency

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wearthefoxhat
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jamesedwards wrote:
Fri Apr 01, 2022 9:52 pm
Out of interest who declares their Crypto profits to HMRC? I have some modest profits this tax year but well below the threshold for capital gains tax.

I'm in two minds whether to declare the profit on my Self Assessment to remain squeaky clean, or whether declaring that I am dabbling in Crypto might generate unwanted attention.

Views?
If you bought and sold, and there is a profit trail going through your bank account, then best to declare each tax year. (The HMRC will happily collect any tax retrospectively from years ago)

If they remain untouched and are held in a crypto wallet, probably best not to bring attention to it.

On balance, a good accountant that understands the whole subject, is the best way forward.
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jamesedwards
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wearthefoxhat wrote:
Sat Apr 02, 2022 11:01 am
jamesedwards wrote:
Fri Apr 01, 2022 9:52 pm
Out of interest who declares their Crypto profits to HMRC? I have some modest profits this tax year but well below the threshold for capital gains tax.

I'm in two minds whether to declare the profit on my Self Assessment to remain squeaky clean, or whether declaring that I am dabbling in Crypto might generate unwanted attention.

Views?
If you bought and sold, and there is a profit trail going through your bank account, then best to declare each tax year. (The HMRC will happily collect any tax retrospectively from years ago)

If they remain untouched and are held in a crypto wallet, probably best not to bring attention to it.

On balance, a good accountant that understands the whole subject, is the best way forward.
As I understand it capital gains tax is only payable on any profit that is realised. Therefore if I'm sitting on a potential crypto profit in a set tax year that would be under the capital gains threshold then I figure it's best to realise this profit before the end of the tax year (this coming tuesday) and then buy back in at the beginning of the next. This way I offset this year's allowance against the next?
foxwood
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You should be able to buy back immediately and hopefully get close to same price. Doesn't matter what year asset is bought in - the sale proceeds less purchase is all hmrc are interested in.

So, with your idea, you realize the the current profit in this tax year and pay no tax.

Future gains are then relative to the buy back price which is a whole new transaction.

They have a whole section on crypto buying and selling so they understand there is tax to be won - https://www.gov.uk/government/publicati ... yptoassets
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jamesedwards
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foxwood wrote:
Sat Apr 02, 2022 5:41 pm
You should be able to buy back immediately and hopefully get close to same price. Doesn't matter what year asset is bought in - the sale proceeds less purchase is all hmrc are interested in.

So, with your idea, you realize the the current profit in this tax year and pay no tax.

Future gains are then relative to the buy back price which is a whole new transaction.

They have a whole section on crypto buying and selling so they understand there is tax to be won - https://www.gov.uk/government/publicati ... yptoassets
Thanks, good point that I can buy back immediately. As it stands I think I will sell before tuesday and declare the profit on my self assessment.
BFDon
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jamesedwards wrote:
Sat Apr 02, 2022 5:06 pm
As I understand it capital gains tax is only payable on any profit that is realised. Therefore if I'm sitting on a potential crypto profit in a set tax year that would be under the capital gains threshold then I figure it's best to realise this profit before the end of the tax year (this coming tuesday) and then buy back in at the beginning of the next. This way I offset this year's allowance against the next?
Yes, you should be taking advantage of your CG tax allowance. But the spreads on crypto exchanges can be large, chances are you won't be able to sell and buy back at the same price unless the market moves down during the interim. So check the money you are saving is less than it costs you.

Declare it, even if there's no tax to pay. There nothing wrong with investing in crypto.. It's good practice as well, if you get all your records in order now and declare everything then you avoid a nightmare scenario down the line when the tax person comes knocking and you have no access to your old transactions. I do a return every year despite having no tax liability.

Beware you need to wait 30 days between the sell and buy order. Read up on the bed and breakfast rule. Selling and buying the same asset shortly after wouldn't trigger the capital gains as you planned and a month is a long time in crypto
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jamesedwards
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BFDon wrote:
Sun Apr 03, 2022 8:33 pm
jamesedwards wrote:
Sat Apr 02, 2022 5:06 pm
As I understand it capital gains tax is only payable on any profit that is realised. Therefore if I'm sitting on a potential crypto profit in a set tax year that would be under the capital gains threshold then I figure it's best to realise this profit before the end of the tax year (this coming tuesday) and then buy back in at the beginning of the next. This way I offset this year's allowance against the next?
Yes, you should be taking advantage of your CG tax allowance. But the spreads on crypto exchanges can be large, chances are you won't be able to sell and buy back at the same price unless the market moves down during the interim. So check the money you are saving is less than it costs you.

Declare it, even if there's no tax to pay. There nothing wrong with investing in crypto.. It's good practice as well, if you get all your records in order now and declare everything then you avoid a nightmare scenario down the line when the tax person comes knocking and you have no access to your old transactions. I do a return every year despite having no tax liability.

Beware you need to wait 30 days between the sell and buy order. Read up on the bed and breakfast rule. Selling and buying the same asset shortly after wouldn't trigger the capital gains as you planned and a month is a long time in crypto
Thanks for the info. Am I ok to leave my balance in my crypto account or do I need to take it out into my bank and then redeposit 30 days later?
BFDon
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Fine to leave it in there. But no chance if I was bullish on crypto i'd be cashing in so save some capital gains. You could be buying back at double the price in a month. Even when I buy and sell funds to activate capital gains I use cash reserves to action the trade on the same day (slightly different funds but with same underlying assets to avoid the bed and breakfast rule) so i'm never out of the market
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jamesedwards
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BFDon wrote:
Sun Apr 03, 2022 9:20 pm
Fine to leave it in there. But no chance if I was bullish on crypto i'd be cashing in so save some capital gains. You could be buying back at double the price in a month. Even when I buy and sell funds to activate capital gains I use cash reserves to action the trade on the same day (slightly different funds but with same underlying assets to avoid the bed and breakfast rule) so i'm never out of the market
Thanks for the info.
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jamesedwards
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For anyone interested I declared I had a Capital Gain on my Self Assessment but when I ticked the box saying it was less than the threshold I had to provide no details of what the gain was at all.
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firlandsfarm
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jamesedwards wrote:
Sat Apr 02, 2022 5:06 pm
As I understand it capital gains tax is only payable on any profit that is realised. Therefore if I'm sitting on a potential crypto profit in a set tax year that would be under the capital gains threshold then I figure it's best to realise this profit before the end of the tax year (this coming tuesday) and then buy back in at the beginning of the next. This way I offset this year's allowance against the next?
That's the well proven technique of "Bed-and-Breakfasting" ... Google it and you will die before you read all the comments/references thrown up! :)
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jamesedwards
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firlandsfarm wrote:
Sat Apr 16, 2022 12:08 pm
jamesedwards wrote:
Sat Apr 02, 2022 5:06 pm
As I understand it capital gains tax is only payable on any profit that is realised. Therefore if I'm sitting on a potential crypto profit in a set tax year that would be under the capital gains threshold then I figure it's best to realise this profit before the end of the tax year (this coming tuesday) and then buy back in at the beginning of the next. This way I offset this year's allowance against the next?
That's the well proven technique of "Bed-and-Breakfasting" ... Google it and you will die before you read all the comments/references thrown up! :)
Thanks, that was covered in this thread. If you do this then you have to wait at least 30 days before buying back in to avoid the bed and breakfast rule. My time out is working well for me so far, but itching to get back in. :D
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Euler
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Location: Bet Angel HQ

Bitcoin 63% off all time high, Eth 75%.

So much for being a hedge against inflation, economy etc.
sionascaig
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article in paper saying current cost of mining 1 bitcoin c £25k atm
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Naffman
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The people that I feel most sorry are the people of El Salvador, one man’s BTC obsession will destroy the country.
BFDon
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Joined: Fri Feb 09, 2018 5:56 pm

It's rough out there but some context is needed. YTD S&P down 21.8%, Amazon 39%, Tesla 46%. Gold had a nice run in January but essentially flat over 2 years, no better than BTC or ETH. It will be interesting if we continue this bearish macro outlook just how much crypto will fall
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