“For UK tax purposes, profits from a crypto trade will be subject to income tax” – what does this mean for simple doge/eth/btc hodler?

“For UK tax purposes, profits from a crypto trade will be subject to income tax” – what does this mean for simple doge/eth/btc hodler?

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  1. In the UK you pay CGT and crypto trades (after your £12,300 allowance)

    It doesn’t matter if you sell for fiat or another coin, each trade is a taxable event

    In the case that you are a professional trading business, you would pay income tax on your trades, which is at a much higher amount. If you have to ask if you are a professional trading firm, then you aren’t.

    As an individual you may also have to pay income tax on interest earned – this can be from airdrops, staking, mining etc

    You have a £1000 allowance per year for interest if you are a basic rate taxpayer and £500 if you are higher rate

  2. In my jurisdiction if you buy Bitcoin three times or more within a six month period, you are considered a trader by profession, you have to pay higher taxes on all of your income and you are fined for not declaring your “profession” to the Tax authorities… 😨

  3. You should utilise your CGT allowance every year. Sell and rebuy your crypto ensuring you stay below your 12k profit allowance, which essentially ‘writes it off’ instead of compounding it year on year. For example, you buy 10000 coins at £1. Next year they are worth £2, nursing a £10k profit. Sell and rebuy using a stablecoin and you write of that profit and start over at £2 a coin. In year 2 the coin goes to £3. If you hadn’t done the rebuy the previous year, you would be looking at £20k profit and subject to CGT, however you have ‘only’ made £10k and therefore no tax.

  4. It looks like this post is about taxes. Tax laws vary between countries, so you may get more helpful replies if you specify the place you are asking about.

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