Capital Gains Tax On Bitcoin

justin128

In 2015 I invested £3,000 in Bitcoin and it has been a great investment.

I now want to start taking profits while avoiding capital gains tax. Can I cash in £6,000, as the whole of my initial investment plus £3,000 profit tax free, leaving the balance in the account as all profit? Or do I need to work out the cost of the units I am selling and only add this cost to the £3,000 tax free? 

eskbanker

The latter is the closer to the mark - CGT calculation needs to be based on the gain per unit, where all units are pooled together, so you'd need to divide £3K by the unit gain to work out the number of units to sell if you wish to avoid any CGT being payable.

[Deleted User]

justin128 said:

In 2015 I invested £3,000 in Bitcoin and it has been a great investment.

I now want to start taking profits while avoiding capital gains tax. Can I cash in £6,000, as the whole of my initial investment plus £3,000 profit tax free, leaving the balance in the account as all profit? Or do I need to work out the cost of the units I am selling and only add this cost to the £3,000 tax free? 

The first option is completely wrong. 

Let’s say they are now worth £15000 - you have a gain of £12000. 

You need, therefore, to sell a quarter of them (1/4 of £12000 is £3000) 

TheGreenFrog

A great investment indeed.  Your bitcoin now worth at least £660,000 I think.  No way to avoid any meaningful amount of CGT on that magnitude of gain.  

[Deleted User]

TheGreenFrog said:

A great investment indeed.  Your bitcoin now worth at least £660,000 I think.  No way to avoid any meaningful amount of CGT on that magnitude of gain.  

Makes a mockery of my calculation. 

Can sell 0.45% of holding.