Don’t you just hate those smug people you read about who bought Bitcoins for a couple of quid and are now millionaires? I know I do. But they may soon be laughing on the other side of their faces. The big Bitcoin tax clampdown may be about to become a thing.
The lovely lads and lasses at HMRC are taking aim at crypto-currency investors. And the profits they are making. The taxman wants his slice of the pie.
All of which may be bad news for the bloke down the pub who reckons he has made a mint from Bitcoin or Ethereum. Or even WhopperCoin.
Way back in 2014 HMRC published guidelines on tax liabilities for those involved in crypto-currency trading, mining, and processing. You can find those guidelines here.
What tax do I have to pay?
None if they don’t catch you. But, the potential liabilities include Capital Gains Tax and possibly income tax.
If you’ve got a few Bitcoins squirrelled away which have rocketed in value you may have to pay Capital Gains Tax on your profits. This also applies if you have diverted said profits into other crypto-currencies. And, of course, if you use the profits to invest in other assets such as property the dreaded Capital Gains tax will bite you again.
Those sat at home in front of a PC trading crypto-currency full-time may be liable for income tax. Assuming they are making a profit of course. Which begs the question – “Why don’t the HMRC give you a refund if you make a loss?” Just a thought.
It isn’t just in the UK that the taxman is scenting blood
In the United States the SEC (Securities and Exchange Commission) are keeping a close eye on those involved in crypto-currency. Especially those who may be dabbling in the shadier side of things.
ICOs and fraud
The SEC have stopped what they describe as a ‘scam’ ICO. The initial coin offering was attempting to raise a billion dollars to fund a decentralised bank. But the SEC cried foul and obtained a court order to stop the AriseBank scheme.
Authorities in China, Singapore, Hong Kong and Canada are also monitoring the huge number of ICOs which are taking place around the world. This particular crackdown is to protect crypto-currency investors against scams rather than to collect tax. Though that will be a nice side bonus of course.