Tax returns & Bitcoin

coyrls

eskbanker said:

Type_45 said:

Just to clarify:

I entered the 20/21 tax year with about £7,000 worth of crypto currency. I'd been holding/HODLing this crypto for years as it had depreciated drastically.

But when, during the 20/21 tax year, the value went up, I sold all of it for £8385. 

But then I re-bought £2605 during the 20/21 tax year.

That doesn't really clarify!

When assessing capital gains, it's the original acquisition cost that matters, not the value at the start of a tax year, so your £7K figure is irrelevant.

Likewise, the matching rules applied to subsequent repurchases require detail of the timescale between selling and rebuying, so if your £2,605 purchase was of the same assets and within 30 days then that affects the CGT calculation.

You're right but in this instance the numbers are too small for any CGT to be due in the 20/21 Tax year, given that £7,000 was less than the purchase price and the selling price was £8385.  The matching rule could come into play in future tax years but frankly it's unlikely.

Type_45

In 2017/2018 tax year I spent £9735 on crypto. I didn't trade much. I mostly just bought and held as the value plumetted.

In 20/21 tax year I sold the crypto for £8385.

In the 20/21 tax year I then re-bought £2605 of Bitcoin.


My Bitcoin valuation at this precise moment is £2897.




I have to do a SA tax return for 20/21 as I've gone over my £7,500 rent a room scheme limit (I've made about £9,000 or so).


So, do I also have to declare anything about my crypto?

Type_45

coyrls said:

eskbanker said:

Type_45 said:

Just to clarify:

I entered the 20/21 tax year with about £7,000 worth of crypto currency. I'd been holding/HODLing this crypto for years as it had depreciated drastically.

But when, during the 20/21 tax year, the value went up, I sold all of it for £8385. 

But then I re-bought £2605 during the 20/21 tax year.

That doesn't really clarify!

When assessing capital gains, it's the original acquisition cost that matters, not the value at the start of a tax year, so your £7K figure is irrelevant.

Likewise, the matching rules applied to subsequent repurchases require detail of the timescale between selling and rebuying, so if your £2,605 purchase was of the same assets and within 30 days then that affects the CGT calculation.

You're right but in this instance the numbers are too small for any CGT to be due in the 20/21 Tax year, given that £7,000 was less than the purchase price and the selling price was £8385.  The matching rule could come into play in future tax years but frankly it's unlikely.

I know I don't have to pay any tax on the crypto, as I've not made £12,400 of gains. But does any of my crypto activity need to be declared on my Self assessment tax return?

underground99

Type_45 said:

coyrls said:

eskbanker said:

Type_45 said:

Just to clarify:

I entered the 20/21 tax year with about £7,000 worth of crypto currency. I'd been holding/HODLing this crypto for years as it had depreciated drastically.

But when, during the 20/21 tax year, the value went up, I sold all of it for £8385. 

But then I re-bought £2605 during the 20/21 tax year.

That doesn't really clarify!

When assessing capital gains, it's the original acquisition cost that matters, not the value at the start of a tax year, so your £7K figure is irrelevant.

Likewise, the matching rules applied to subsequent repurchases require detail of the timescale between selling and rebuying, so if your £2,605 purchase was of the same assets and within 30 days then that affects the CGT calculation.

You're right but in this instance the numbers are too small for any CGT to be due in the 20/21 Tax year, given that £7,000 was less than the purchase price and the selling price was £8385.  The matching rule could come into play in future tax years but frankly it's unlikely.

I know I don't have to pay any tax on the crypto, as I've not made £12,400 of gains. But does any of my crypto activity need to be declared on my Self assessment tax return?

Short answer, no, as you don't have over £12300 of gains and haven't had over £49200 of sales in 20/21 tax year.


Longer answer, if the re-buy of the £2605 of Bitcoin in 20/21 was less than 30 days after you had just sold that quantity of Bitcoin, the 200/21 disposal of that quantity of bitcoin would be tied to the later purchase of bitcoin, rather than to the 2017/18 Bitcoin, meaning you still have some of the 2017/18 ones as far as the taxman is concerned.

In other words if you did do some re-purchases only a short space of time after the sales, it could mean that the coins you now hold as of today are considered to be bought (or partially bought) in 2017/18 rather than in 20/21, and their official allowable cost may be something other than the £2605 amount.  So if in some future tax year you are selling the bitcoin you currently hold for an amount more than the annual exemption of that year, you might need to do those more detailed calculations to see what the coins you currently hold (valued at £2897 right now) had officially cost. 

Type_45

These are my purchases/sales and the dates.

This doesn't include trades if coins within exchanges, which i do have a record of on the other exchanges themselves:

underground99

Type_45 said:

These are my purchases/sales and the dates.

This doesn't include trades if coins within exchanges, which i do have a record of on the other exchanges themselves.

Without the quantities and types for each of the purchases, and whether they were all the same type of crypto, it's not possible to confirm the exact gain or carrying cost.

If for example the £4k sale on 25 December was 0.22 bitcoins (when bitcoin was £18k per coin) , and then the cumulative £1.6k of purchases in the first week of January were 0.06 bitcoins (when bitcoin was £25-26k a coin), the 0.22BTC sale proceeds on Christmas Day would be split up and matched firstly to the 0.06BTC purchase in January... producing a loss of about 0.06 x (18000-26000), about £500... and then the remaining 0.16BTC sale would be matched to the older purchases in 2017, making a further loss. 

But as the official 'loss' for CGT purposes comes from comparing the November and December 2020 sales to some 2017 purchases and some 2021 purchases, the exact loss in November/December 2020 is not as simple as saying the proceeds in 2020 was £1566 lower than the 2017 costs.

Likewise if the purchase on 15 Feb '21 was the same type of coin as had been sold on 5 Feb, that may be a further loss because the two transactions would be matched under the 30 day rule and the 15 Feb BTC price was higher than it was on 5 Feb. 

The various trading between coin types on the exchanges would also confuse the matter.

I think what you can say is it's likely there was a loss produced in 2020/21 but not a massive one, just a couple of thousand, so it isn't necessarily worth the hassle of claiming it to be able to carry it forwards if you're not going to make big gains in excess of your exemptions in the future.  If the trades from one type of coin to another 'within exchanges' were below £40k or so total transaction value, you would overall not be over the £49200 total sales proceeds limit, so nothing to declare.

 

Type_45

Deleted_User said:

To calculate gains/losses for CGT, you need the number of coins bought or sold on each date, as well as the price, treating each different crypto currency separately. If you have not just bought or sold cryptos for £, but also swapped 1 crypto directly for another crypto, then for such swaps, you need the number of coins of crypto A being swapped for the number of coins of crypto B on a given date, and also the £ equivalent value at that date. Are you haveing fun yet?

I'd rather end it all now than have to work through all that! 🙈

Type_45

underground99 said:

Type_45 said:

These are my purchases/sales and the dates.

This doesn't include trades if coins within exchanges, which i do have a record of on the other exchanges themselves.

Without the quantities and types for each of the purchases, and whether they were all the same type of crypto, it's not possible to confirm the exact gain or carrying cost.

If for example the £4k sale on 25 December was 0.22 bitcoins (when bitcoin was £18k per coin) , and then the cumulative £1.6k of purchases in the first week of January were 0.06 bitcoins (when bitcoin was £25-26k a coin), the 0.22BTC sale proceeds on Christmas Day would be split up and matched firstly to the 0.06BTC purchase in January... producing a loss of about 0.06 x (18000-26000), about £500... and then the remaining 0.16BTC sale would be matched to the older purchases in 2017, making a further loss. 

But as the official 'loss' for CGT purposes comes from comparing the November and December 2020 sales to some 2017 purchases and some 2021 purchases, the exact loss in November/December 2020 is not as simple as saying the proceeds in 2020 was £1566 lower than the 2017 costs.

Likewise if the purchase on 15 Feb '21 was the same type of coin as had been sold on 5 Feb, that may be a further loss because the two transactions would be matched under the 30 day rule and the 15 Feb BTC price was higher than it was on 5 Feb. 

The various trading between coin types on the exchanges would also confuse the matter.

I think what you can say is it's likely there was a loss produced in 2020/21 but not a massive one, just a couple of thousand, so it isn't necessarily worth the hassle of claiming it to be able to carry it forwards if you're not going to make big gains in excess of your exemptions in the future.  If the trades from one type of coin to another 'within exchanges' were below £40k or so total transaction value, you would overall not be over the £49200 total sales proceeds limit, so nothing to declare.

 

So when declaring my excess income from the rent a room scheme, you think I should not mention the crypto at all? 

underground99

Type_45 said:

underground99 said:

Type_45 said:

These are my purchases/sales and the dates.

This doesn't include trades if coins within exchanges, which i do have a record of on the other exchanges themselves.

Without the quantities and types for each of the purchases, and whether they were all the same type of crypto, it's not possible to confirm the exact gain or carrying cost.

If for example the £4k sale on 25 December was 0.22 bitcoins (when bitcoin was £18k per coin) , and then the cumulative £1.6k of purchases in the first week of January were 0.06 bitcoins (when bitcoin was £25-26k a coin), the 0.22BTC sale proceeds on Christmas Day would be split up and matched firstly to the 0.06BTC purchase in January... producing a loss of about 0.06 x (18000-26000), about £500... and then the remaining 0.16BTC sale would be matched to the older purchases in 2017, making a further loss. 

But as the official 'loss' for CGT purposes comes from comparing the November and December 2020 sales to some 2017 purchases and some 2021 purchases, the exact loss in November/December 2020 is not as simple as saying the proceeds in 2020 was £1566 lower than the 2017 costs.

Likewise if the purchase on 15 Feb '21 was the same type of coin as had been sold on 5 Feb, that may be a further loss because the two transactions would be matched under the 30 day rule and the 15 Feb BTC price was higher than it was on 5 Feb. 

The various trading between coin types on the exchanges would also confuse the matter.

I think what you can say is it's likely there was a loss produced in 2020/21 but not a massive one, just a couple of thousand, so it isn't necessarily worth the hassle of claiming it to be able to carry it forwards if you're not going to make big gains in excess of your exemptions in the future.  If the trades from one type of coin to another 'within exchanges' were below £40k or so total transaction value, you would overall not be over the £49200 total sales proceeds limit, so nothing to declare.

 

So when declaring my excess income from the rent a room scheme, you think I should not mention the crypto at all? 

As mentioned before, if you don't want to do the detailed calculations to prove out your exact allowable 2020/21 losses to carry them forward to use in future tax years,:
"Short answer, no, as you don't have over £12300 of gains and haven't had over £49200 of sales in 20/21 tax year."

coyrls

Type_45 said:

Deleted_User said:

To calculate gains/losses for CGT, you need the number of coins bought or sold on each date, as well as the price, treating each different crypto currency separately. If you have not just bought or sold cryptos for £, but also swapped 1 crypto directly for another crypto, then for such swaps, you need the number of coins of crypto A being swapped for the number of coins of crypto B on a given date, and also the £ equivalent value at that date. Are you haveing fun yet?

I'd rather end it all now than have to work through all that! 🙈

No, don't do it!