Taxes on Cryptocurrency Bitcoin and Ethereum

Published / Last Updated on 14/11/2019

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? 
  • How much? 
  • 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.

HMRC's full guidance:

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