Buying Bitcoin is not the only way of acquiring them. For example, if your employer gives you Bitcoin this will be treated as remuneration with income tax and National Insurance applying, as for a bonus.
You may be one of those committed people who have mined Bitcoin. If so the value obtained will be subject to income tax, usually as income other than trading although in extreme cases HMRC might try to argue that it is trading income with consequent NIC obligations.
Tokens or other cryptocurrencies may arise through “airdrops”, when people are given assets as part of an advertising or marketing campaign. If you have not done anything in return, and it is received by you personally and not through a business, income tax should not arise. If it is in return for a service it will be caught for income tax.
A couple of points you should keep in mind. Because crypto assets are not regarded as currency you cannot pay them into a pension fund and obtain income tax relief. On the other hand, they are still assets that have a value which means that they will be part of your estate on death for inheritance tax purposes.
Finally, it is very important that you keep records of all your transactions so that you can complete your self-assessment accurately. You will also need these records if HMRC raise an enquiry.
Unlike shares, crypto asset exchanges will typically keep information for only a short period of time and the onus is on you to satisfy HMRC. You should keep details of the type of asset, the date of the transaction, the number bought and sold, the value in sterling at the date of the transaction, bank statements and wallet addresses.
The post Bitcoin is a gamble, but you’re not exempt from capital gains and even inheritance tax appeared first on TechFans.