I am sick of reading about Bitcoin and its exponential rise! It is currently standing at $18,000, having been $630 when HMRC published its bulletin on cryptocurrencies back in March 2014.
I recently referred to this to consider the tax implications for one lucky ‘investor’ who was sitting on a considerable profit. I was heartened by HMRC’s analysis that cryptocurrency activity may be so speculative that it can be treated as gambling and therefore not subject to tax at all. This is clearly an attractive proposition for Bitcoin investors to take but they should consider the following cautionary points:
Although I think the gambling argument may not stack up technically the content of the HMRC bulletin may give speculative investors a nil tax filing position. What is however abundantly clear is that investors will be keen for any profit which is taxable to be subject to favourable capital gains tax rates of up to 20% rather than income tax rates of up to 45%.
Particular care should be taken in respect of cryptocurrency cases based on the specific facts of each case.
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