How do I calculate tax owed for Bitcoin investment.

DVT17

Hi,

I wonder if someone can help me here?

I bought a coupel of Bitcoin in 2014.  I sold them for £48,000 in May 2022.  I then used the £48,000 to buy back in June 2022 when I had 2.9 Bitcoin.  I then sold again later that month for a  loss at £44,000.  I then bought back in July 2022 using the £44,000 to buy 2.4 Bitcoin.  It had increased in value so buying me less.  In August 2022 I again sold my holding for £42,000.  In December 2023, I  spent the £42,000 to buy 1.4 Bitcoin.  It again increased.  In January, 2024, I sold the 1.4 Bitcoin for £49,000.  Later  on in January, 2024, I used the £49,000 to buy 1.42 Bitcoin.  Latest prices are that my holding is worth over £100,000.  Sometime in the past year I did send some BTC to another exchange where I purchased £1000 of XRP.  That's now work around £6,000.  (That's possibly not too important right now).  Any advice please?  I believe I have missed some deadlines. 

Some  of the above numbers are rounded.

jimjames

What did they cost in 2014? 

masonic

You've not mentioned how much you paid in 2014. You've also not mentioned when in May 2022 and when in June 2022 (whether this was within 30 days - highly relevant). Likewise for the June sale and July purchase. And so on.

It looks like there may be a large capital gain in the 2022/23 tax year that you would have to report late, and another smaller gain in the 2023/24 tax year that you still have time to report.

masonic

jimjames said:

What did they cost in 2014?

The price ranged from about £200-600 that year, so the following £40k+ transactions suggest a profit has been made

DVT17

I spent £100 pounds per BTC.  It may have been late 2013.  I mentioned 2014 because I talked about BTC when eating a meal and I can remember my dad was there and he passed away in late 2014.

DVT17

masonic said:

You've not mentioned how much you paid in 2014. You've also not mentioned when in May 2022 and when in June 2022 (whether this was within 30 days - highly relevant). Likewise for the June sale and July purchase. And so on.

It looks like there may be a large capital gain in the 2022/23 tax year that you would have to report late, and another smaller gain in the 2023/24 tax year that you still have time to report.

It was 11th of May then bought back on 19th of June and then sold on the 30th of June before buying again on the 7th of July. 2022.

masonic

Then 11th May was a disposal with capital gain of about £47,800 for the 2022/23 tax year. But the 19th June - 30th June - 7th July was Bed & Breakfasting (the purchase can be matched to a prior sale within 30 days prior), so you only disposed of 0.5 BTC for a loss of £690, which could be used to reduce that gain. These trades alone mean you would need to use the real time reporting service or file a tax return for that year. So expect a penalty and interest charge to come your way for that year.

You will need to apply the same sort of process to your 2023/24 trades and you'd need to report these pretty sharpish. I think you have probably missed the boat for registering for self assessment for that tax year too, but perhaps the real time reporting service is still an option?

DVT17

masonic said:

Then 11th May was a disposal with capital gain of about £47,800 for the 2022/23 tax year. But the 19th June - 30th June - 7th July was Bed & Breakfasting (the purchase can be matched to a prior sale within 30 days prior), so you only disposed of 0.5 BTC for a loss of £690, which could be used to reduce that gain. These trades alone mean you would need to use the real time reporting service or file a tax return for that year. So expect a penalty and interest charge to come your way for that year.

You will need to apply the same sort of process to your 2023/24 trades and you'd need to report these pretty sharpish. I think you have probably missed the boat for registering for self assessment for that tax year too, but perhaps the real time reporting service is still an option?

Thanks for this.  What kind of penalty and interest charge can I expect?

I'm ignorant about these matters.  Should I go and see an accountant?

masonic

I don't know how much the penalty is, but their standard interest rate (I believe) is 8% p.a. on the tax due.

Your transactions are not overly complex, you seem to have all the information needed, so you should be able to set everything out on a spreadsheet (templates are available online) to do an accurate calculation for HMRC. I would definitely phone them to discuss the earlier tax year and what to do.