There have been multiple news reports recently about losing access to Bitcoins. One US story reported by my colleague Emma last month and another, from closer to home, reported in January.
But along with all the reports of massive, and rapid, increases in the value of Bitcoin over the last few years, does anyone really give any thought to whether that might also bring with it a proportionately large tax bill?
An interesting and informative article from BDO caught my eye recently which reminded me and sets out very clearly that, in the UK at least, individuals should, at best, be expecting to pay CGT on the profits on their Bitcoins (with the potential for the much higher rates of income tax, albeit in pretty rare circumstances).
Added to that is the fact that digital currency trading platforms, like Coinbase, report transactions directly to HMRC so getting tax reporting obligations wrong will inevitably lead to an HMRC enquiry and potential penalties.
It’s great that HMRC is keeping up with developing technology and the new ways people can use it to invest their money, but I’m not sure that those who are thinking of a little flutter on Bitcoins will always fully appreciate that it might not be quite as simple as buying a lottery ticket.
There was a popular misconception that the profit or gains arising from cryptoassets transactions are viewed as gambling or lottery type winning and therefore are tax-free.
This is not the case
