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I have a query about how trading in cryptocurrency is taxed…

I have a query...

I have a query about how trading in cryptocurrency is taxed by the HMRC. I have made a profit this financial year through capital appreciation of the asset, trading the underline asset & also using high leveraged cfd products. I am confused how this will all relate to tax as a large part of my gains (and large losses) have come from highly speculative trades using high leverage cfds. Do these fall under CGT or gambling as the HMRC are not clear.

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Answered in 4 hours by:
3/25/2018
Robin D.
Robin D., Senior Tax Advisor 4
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Experience: 15years with H & R Block. Divisional leader, Instructor
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Profits made on cryptocurrencies by individuals will generally be subject to capital gains tax (CGT) at a rate of up to 20% after deducting the annual CGT allowance (£11,100 for the 2016/17 tax year).

If you have bought and sold cryptocurrencies through a UK company, any taxable profits will be subject to corporation tax at a rate of 19%.

If you have regularly bought and sold cryptocurrencies HMRC may seek to argue that you are liable to income tax at a rate of up to 45%. Most exchanges will keep a record of your transactions and let you download your history.

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Customer reply replied 3 months ago
Thanks for the reply.Do you have an idea of what would constitute as gambling in regards ***** *****? On the HMRC website they said that some trades would be considered so speculative it would be outside the scope of taxation & at the same time you could not claim losses on.Now I treated cryptocurrency trading as essentially gambling, risking & losing almost all of my entire trading capital at some points using extremely high leverage contract for difference products. In your opinion with these types of trades would I be able to claim capital gains losses on?

Losses my be claimed. If you made a loss on individual transactions, you may be able to offset these losses against your cryptocurrency profits or other capital/trading profits. If you have bought and sold cryptocurrencies through a UK company and the company has made a loss on any individual transactions, loss relief may be available under the corporation tax loss relief rules.

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Customer reply replied 3 months ago
Ok then thank you.I have heard of people using gambling clause to reduce their tax burden, however there are no examples of what speculative even means in terms of cryptocurrency. Finally what in your opinion would count as a speculative bet from a tax perspective in regards ***** *****?

Nothing. As this is still new to tax many things will not be defined. I have given my opinion and do not believe this to be gambling.

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 18,220
Experience: 15years with H & R Block. Divisional leader, Instructor
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