Buying Bitcoin in the UK?

Do NOT forget tax.

The rules can be complex and HMRC now have powers to view your exchange transactions.

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A few weeks ago Coinbase announced they reached an agreement with HMRC to provide data on their user accounts. Others (Binance, Kraken etc) will likely follow. As investors we want to make gains, but HMRC also want their cut. And they are now more capable of getting it
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Let's start with the basics.

If you’ve bought crypto as an investment, you will be subject to Capital Gains Tax (CGT).

A Capital Gain is simply the difference between the price you bought at, and the price when you disposed* of the asset.
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*Disposals mostly refer to selling, but also include:

- crypto for crypto transactions
- using crypto to buy goods/services
- simply giving crypto to someone

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If your capital gain is more than £12.3k for the year, you will be subject to CGT. 12.3k is across all of your assets (so if you made a capital gain in property, stocks, etc you may have already used up that 12.3k, making all of your crypto gains taxable)

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In the volatile world of crypto - we know those gains can (and hope they will) happen overnight.

So don’t be caught blindsided.

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Have a plan. Prepare for the worst (i.e never invest more than you can afford to lose). But also prepare for the best (have a plan for the scenario where your coins moon). Because this is potentially even more important.

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I’ve seen instances where people have triggered a capital gain and tax liability, before their coins have plummeted and they no longer have the assets or cash to settle their taxes. Do not be in that position. In the volatile world of crypto, this can happen VERY easily.

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Example - you bought £1k worth of Altcoin A. It ‘moons’ and is now worth £100k. You sell this for Altcoin B. This is a disposal and you have triggered a capital gain of £99k and a tax bill of £19.8k.

So you now have £100k of Altcoin B and a £19.8k tax bill. BUT...

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Let’s say there’s a market dump overnight and the value of your Altcoin B drops to £10k. You now have £10k worth of crypto assets and a £19.8k tax bill. You’re technically insolvent and HMRC have no sympathies - they can and will come after you.

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This is just one potential risk when dealing with taxes in crypto-it can wipe you out if you’re not careful.

But there are lots of simple strategies you can apply to protect yourself, and all within the letter of the law.

Follow me and I will show you how it’s done.

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