Quote from: unbeaten on December 19, 2017, 08:24:55 PM

Quote from: suky321 on December 19, 2017, 10:27:04 AM

Quote from: unbeaten on December 18, 2017, 07:24:40 PM

Quote from: inrds on December 18, 2017, 04:50:13 PM

Quote from: unbeaten on December 16, 2017, 07:36:22 PM

You don't have to pay tax when you trade one cryptocurrency for another

Could you share your sources for this please? I've been trying to figure out the same myself, and my understanding was that if swapping BTC for any other asset (Crypto included), then it would be subject to capital gains as per:

Quote

Disposing of an asset
Disposing of an asset includes:

selling it
giving it away as a gift, or transferring it to someone else
swapping it for something else

Source: https://www.gov.uk/capital-gains-tax

I do not have a source but technically If you were to do it legit and pay CGT there would be two methods of doing it...

Option 1 - You buy a Bitcoin for £1000, it doubles in value and is now worth £2000. With that £2000 with of Bitcoin to exchange for £2000 worth of Ethereum, that soon doubles and you have £4000 worth. You then sell your £4000 worth of Ethereum for GBP, and pay CTG on the £3000 profit you made.

Option 2 - You buy a Bitcoin for £1000, it doubles in value and is now worth £2000. If you want to declare the CTG on the Bitcoin at the point of purchasing the £2000 worth for Ethereum it will technically be a nightmare, especially if you want to pay off the CTG with the Bitcoin profit. If you worked out that on the £1000 profit you had to pay £100 CGT, it will also cost you money to convert the Bitcoin to fiat on the exchange, and might cost you again to bank transfer that fiat back into your bank to pay the CGT, lets just assume both of these charges are £25 each. So we use £150 worth of the Bitcoin profit to get £100 into your Halifax bank to pay the CGT. Now we are left with £1850 in Bitcoin, we now buy the £1850 worth of Ethereum. This then doubles in value, and we now have £3700 worth, we convert that back to GBP and pay the CGT on the Ethereum profit only which was £1850.

As you can see you loose out big time if you use option 2, both ways I would say are legal as long as you eventually pay the CGT. Imagine if you were day trading crypto's and paying CGT on every conversion from Bitcoin to Ripple and Ripple to Bitcoin and Bitcoin to Steem. It would be absolutely crippling and you would not make any profit especially if each time meant converting some of that to fiat and bank transferring it out to pay CGT.

I think the initial cost that you paid at the very beginning when you first bought the crypto i.e. £1000 should be the principal amount from which you deduct your gains.

If you had no income in a tax year, i.e. making you a basic rate tax payer, then you can legally sell £44800 of crypto, £11300 of that is taxed at 0%, and £33500 is taxed at 10%. Anything above £44800 per year (after principal amount and fees etc deducted) would attract a CGT tax rate of 20%.

So for a sale in the above scenario of £44800, you would pay £3350 tax, leaving £41450 profit to do as you please, this is the legal way of doing it for peace of mind. But this requires patience of waiting for each tax year to end, then selling another £44800 each year (dependent on what the tax rate and allowance is for that tax year). If you have a partner who also has no other income, then you could sell £89600 each year, and pay £6700 CGT tax at 10%.

Sounds pretty awesome, might be worth cashing some out at the end of 2018 for sure. No doubt the CGT on crypto's will change in future and probably for the worse.

Remember though the tax year in the UK is from 6 April to 5 April.