Tax if net worth and income below tax threshold?

theforest

Although this can be a general question I am specifically referring to the exchange of coins and tokens of distributed ledger technology projects, more commonly known as cryptocurrencies:

If ones net worth and income remains well below the tax threshold what is the situation regarding reporting, for tax purposes to HMRC, the exchange of one coin or token for another and whether or not there are gains or losses relative to the fiat value?

I ask because some of these projects pay interest, stake new coins or tokens, have airdrops or perhaps some automated trading that has resulted in many small trades. If there is a requirement to report but there is no tax to pay, due to being below a tax threshold, then trying to work out and document the fiat value of all those events on the date of the event would be a mighty tedious unnecessary task, taking several hours over several days, that would be a great waste of time and effort that could be put to better use.

Sorcerer2018

Are you saying your buying and selling cryptocurrencies? In which case CGT applies on any profits over £12,000, and that would have declared so you pay the right amount of tax.

eskbanker

theforest said:

If there is a requirement to report but there is no tax to pay, due to being below a tax threshold, then trying to work out and document the fiat value of all those events on the date of the event would be a mighty tedious unnecessary task, taking several hours over several days, that would be a great waste of time and effort that could be put to better use.

As per https://www.gov.uk/capital-gains-tax/records, you need to keep records of all acquisitions and disposals of assets, however onerous that may be, which is separate from any requirement to actually report them - you may believe that you're well below tax thresholds but need to be able to prove it....

Ifts

Sorcerer2018 said:

Are you saying your buying and selling cryptocurrencies? In which case CGT applies on any profits over £12,000, and that would have declared so you pay the right amount of tax.

The annual CGT allowance is £12300 not £12000

jimjames

There is no tax threshold for net worth that I'm aware of unless you are saying your net worth is below the income tax annual allowance. I'm not sure what relevance net worth has for tax calculations either, can you explain?

eskbanker

jimjames said:

There is no tax threshold for net worth that I'm aware of

Not when you're alive, anyway....

kinger101

eskbanker said:

jimjames said:

There is no tax threshold for net worth that I'm aware of

Not when you're alive, anyway....

OP - can you confirm whether you're alive, so that we can answer your question accurately.

NottinghamKnight

eskbanker said:

jimjames said:

There is no tax threshold for net worth that I'm aware of

Not when you're alive, anyway....

Another good reason to stay alive, as the BeeGees observed.

theforest

jimjames said:

There is no tax threshold for net worth that I'm aware of unless you are saying your net worth is below the income tax annual allowance.

Yes and my income does not take me above it either.

I'm not sure what relevance net worth has for tax calculations either, can you explain?

I cannot explain because I do not know if it has any relevance, I presume not, but I was concerned that tax would be payable on asset exchanges (like cryptocurrencies) or their value gain regardless of their amount or ones worth, though I think that was answered in an earlier post.

bowlhead99

theforest said:

I cannot explain because I do not know if it has any relevance, I presume not, but I was concerned that tax would be payable on asset exchanges (like cryptocurrencies) or their value gain regardless of their amount or ones worth, though I think that was answered in an earlier post.

Value gain on asset exchanges is indeed taxable, however the first £12300 of realised gains within a tax year is exempt.

Your net worth has nothing to do with it.

Unless you die and inheritance tax is a consideration, the UK tax man doesn't care what you are 'worth', he cares whether you have (a) made income such as interest, dividends, rents, royalties, property income, employment income, self-employed business income, pension income etc., or (b) made a capital gain by selling or exchanging something at a higher value than you acquired it at.