New HMRC guidance on the taxation of crypto assets and cryptocurrency such as Bitcoin and Ethereum was published on 1 November 2019.
The starting point for HMRC is that crypto currencies are not considered to be money they are considered to be assets.
Questions to ask yourself:
Do you trade (buy/sell) in crypto assets?
What is the frequency of any trades?
What is your business intention? To make profit?
Is it a hobby or full scale commercial activity?
If 'mining' for crypto assets - again, is it a hobby or full scale commercial enterprise? Do you have just your home PC or laptop 'mining' or do you have a scaleable network or computers doing the mining/code breaking?
Are you a limited company or are you a sole trader?
Limited company = corporation tax on gains/profits and offset against business expenses
Sole trader (as a trade) = income tax on gains/less expenses and offset against business expenses, but may also include some capital gains tax issues
Sole trader (hobby) = capital gains tax on profits on sales, subject to the usual costs offset against gains and also capital gains tax annual allowances.
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