There are two things guaranteed in life…death and taxes. With crypto becoming more mainstream, the government getting involved was inevitable. When talking transactions dealing with crypto, the IRS was not far behind.
Bitcoin was created as a digital currency. It was also created without a third party in mind (Banks). After the crash in 2008, myself as many probably wondered if this would happen again. Is my money secure? Bitcoin among other digital currencies couldn’t have come at a better time. Giving the anonymous nature of digital currency, the first question is why should I pay taxes? Doesn’t the government take enough?
I am not going to give suggestions on how to not pay your taxes, but I do not believe digital currency was suppose to fall in the same criteria as the dollar. Like the US dollar and most fiat currencies, Bitcoin isn’t backed by physical assets in a vault. Instead its value is held as a mode of payment. Can I pay you in gum? Of course not! Crypto is much deeper than bartering. The technology behind the movement is revolutionary. The digital economy is alive and well and it’s moving fast. There is just one problem…the taxman/taxwoman wants in!
Intercoin communities can maintain and run their own community currency and keep more if not all of their currency flowing within their community. With the traditional financial system this doesn’t happen leading to high taxes and privacy concerns.
Thank you @AlishaAnglinArt for exploring and sharing your thoughts on such an important topic as a Forbes advisor stated in one of the great articles that The Internal Revenue Service (IRS) treats all cryptocurrencies as capital assets, and you owe taxes when they’re sold at a profit."
And I believe that everyone understands that this is exactly what happens when someone sells any of traditional investments, like stocks or funds with profit.
Moreover “If you purchase goods or services with cryptocurrency your purchase counts as a sale of that crypto. This means you’ll owe capital gains taxes if your coins have increased in value over what you originally paid for them.”
I strongly recommend checking all other aspects here:
Also, anyone from the UK needs to know that when one trades crypto, unlike some forms of forex trading, HMRC does not class it as gambling. As a result, one is always liable to pay tax and the UK crypto tax rules are regularly updated in this guide to keep everyone in the UK informed and tax compliant.
Coinbase gave a notice which requires the disclosure of customers with a UK address who received payments of more than £5,000 in fiat currency out of electronic stored value payment services provided by CB Payments LTD during the 2019 and 2020 tax years.
The UK government requires you to pay Capital Gains Tax when you:
-sell your tokens
-exchange your tokens for a different type of cryptoasset
-use your tokens to pay for goods or services
-give away your tokens to another person (unless it’s a gift to your spouse or civil partner)
Also, if you donate tokens to charity, you may need to pay Capital Gains Tax on them.