Gold - Bitcoin - HMRC

[Mike12421]

Hello all, 

I have been a lurker of this forum for some time and so thought best to finally say hi. 

I am a big believer in crypto and use it extensively. I have also been using it to buy Gold Brittania's via Bullionstar and having them hold them for me as an investment. 

My query however, is when the time comes for me to sell up (either selling to Bullionstar directly or shipping my gold back to the UK and selling here), how will HMRC react? 

I will obviously have full receipts for all my gold with Bullionstar and my crypto is all completely legal, which I have bought over a long time from various places (exchanges, Coinbase, Localbitcoins etc). However, as I am sure most will agree, trying to keep accurate records of all this crypto movement is near impossible, certainly for me, and so it may look suspicious not being able to accurately account for the initial source of funds for the crypto. 

Can anyone provide any advice regarding what I could do. 

[Martlet]

Prevailing advice for UK tax on Bitcoin (and friends) is to treat is the same as any other asset.  Each transaction is considered a disposal and tax event, with CGT applied if you are over CGT allowance for each year. Capital gains are calculated on the gain/profit between purchase and sale. reddit /r/BitcoinUK has some tax great advise and tax experts who'll give a more specific info.  

I'm curious why buying gold from Bullionstar if in the UK?  That might look odd or make it more complicated. As i understand, if you are abroad its outside HMRC until you import the asset, and CGT on the net gain may be liable.

 

[HelpingHands]

https://www.gov.uk/government/publications/tax-on-cryptoassets/cryptoassets-for-individuals

 

[RoughDog]

1 hour ago, Mike12421 said:

Hello all, 

I have been a lurker of this forum for some time and so thought best to finally say hi. 

I am a big believer in crypto and use it extensively. I have also been using it to buy Gold Brittania's via Bullionstar and having them hold them for me as an investment. 

My query however, is when the time comes for me to sell up (either selling to Bullionstar directly or shipping my gold back to the UK and selling here), how will HMRC react? 

I will obviously have full receipts for all my gold with Bullionstar and my crypto is all completely legal, which I have bought over a long time from various places (exchanges, Coinbase, Localbitcoins etc). However, as I am sure most will agree, trying to keep accurate records of all this crypto movement is near impossible, certainly for me, and so it may look suspicious not being able to accurately account for the initial source of funds for the crypto. 

Can anyone provide any advice regarding what I could do. 

I thought crypto was supposed to be fully transparent.  Quote from the web.

"Bitcoin is often perceived as an anonymous payment network. But in reality, Bitcoin is probably the most transparent payment network in the world."

"All Bitcoin transactions are public, traceable, and permanently stored in the Bitcoin network. "

 

[HelpingHands]

2 minutes ago, RoughDog said:

I thought crypto was supposed to be fully transparent.  Quote from the web.

"Bitcoin is often perceived as an anonymous payment network. But in reality, Bitcoin is probably the most transparent payment network in the world."

 

Yes you know which addresses send btc to which other addresses.   Not the personal details of the wallet owner though.     

[RoughDog]

Never used it myself.  I not sure what all the fuss is about other than there is a chance to make money from the price increase of a bitcoin.

I know there are sites that can lookup a bitcoin address holder.  I am not sure whether a wallet and an address are one of the same.

If you know someones address can you search all their history?

[HelpingHands]

The history and balance of that address, yes.

You can also follow back the entire history of each coin back through all the addresses back to when it was mined.

[Mike12421]

Many thanks for all the advice, I will certainly give reddit a read. 

As for why I use Bullionstar, it's for two reasons; they accept crypto and more importantly, they have a sort of savings program whereby you can buy 1g at a time and so I can buy as much or as little as I'm able to afford at the time. I would much prefer to keep my money a little closer to home however this was the only place that met my needs that I could find.

[HelpingHands]

Id rather be buying from somewhere and take delivery.

There are closer dealers that accept btc.

https://www.sharpspixley.com/

https://www.bitgild.com/

I haven't used either for a while so DYOR.

[RoughDog]

3 hours ago, HelpingHands said:

The history and balance of that address, yes.

You can also follow back the entire history of each coin back through all the addresses back to when it was mined.

Don't like the idea of that myself.  Would rather have my transactions private.

[HelpingHands]

3 minutes ago, RoughDog said:

Don't like the idea of that myself.  Would rather have my transactions private.

Well you can have as many addresses and wallets as you like.

Someone will only know an address is yours if you buy or spend somewhere that knows who you are.

[Bumble]

As far as your Britannias are concerned, these are currency in the UK, and as such are not subject to capital gains tax (CGT). Sovereigns, likewise. You made a good choice to buy Britannias: if you had bought krugs or gold eagles, or something else, then selling them would create a chargeable gain.

HMRC treats cryptos as financial assets, not as currency. For the vast majority of people, selling them would be treated as disposal of a chargeable asset, and you would be liable to pay CGT. The only exception would be if you are a professional trader in cryptos, in which case gains could be assessed as income.

The odd thing about the taxation of cryptos is that you create a chargeable disposal event every time you spend crypto. If you buy a cup of coffee with BTC then strictly speaking you should use the BTC/GBP rate at the time of your purchase to calculate how many GBP you spent, and then make a record of how much gain you made. In practice, of course, this makes the reporting of crypto transactions infeasibly complex. Tax authorities around the world have not yet come up with a solution for this.

[Mike12421]

On 30/07/2019 at 13:08, Bumble said:

As far as your Britannias are concerned, these are currency in the UK, and as such are not subject to capital gains tax (CGT). Sovereigns, likewise. You made a good choice to buy Britannias: if you had bought krugs or gold eagles, or something else, then selling them would create a chargeable gain.

HMRC treats cryptos as financial assets, not as currency. For the vast majority of people, selling them would be treated as disposal of a chargeable asset, and you would be liable to pay CGT. The only exception would be if you are a professional trader in cryptos, in which case gains could be assessed as income.

The odd thing about the taxation of cryptos is that you create a chargeable disposal event every time you spend crypto. If you buy a cup of coffee with BTC then strictly speaking you should use the BTC/GBP rate at the time of your purchase to calculate how many GBP you spent, and then make a record of how much gain you made. In practice, of course, this makes the reporting of crypto transactions infeasibly complex. Tax authorities around the world have not yet come up with a solution for this.

Thank you very much for your advice. It would appear that crypto tax is even more complex than I thought. 

It's a shame that it's so difficult, as it will cause ordinary people to either abandon crypto altogether, or fall foul to HMRC. 

[JB3]

Both might be considered a successful outcome, from HMRC's point of view.

[HelpingHands]

More guidelines were published today but I've only skimmed it,

https://www.fca.org.uk/publication/policy/ps19-22.pdf