Topic: UK tax in relation to bitcoin (Read 17447 times)

As far as I know is the norm of the tax legislation of Germany. I just don't understand how you can track how many bitcoins you have and how long you keep them. It seems to me that such rules exist only for those who voluntarily comply with them. Perhaps these standards prescribed in case the German banks will open personal accounts in bitcoin?

Do you have to hold on to bitcoin for over a year to it to be liable for capital gains tax ?
If under one year would I have to pay income tax ?

Anyone have any thoughts regarding the tax status of selling Casascius coins .... ?

I would appreciate some wisdom here.

A coin - something you can physically hold, ie an Asset

Not really part of a set, as they are individual coins. So could be sold as a series of individual coins

Only a single coin sale of greater than £6k would have any CGT liability ?

So unless the £6k sale price of a coin is broken, then no CGT, or income tax ??#

(God I hope so !)

Mining is not gambling. It is a business investment with a theoretically positive ROI. Would you say that Shell is into gambling because it has to gamble that when it spends $100m to drill a deep-sea well that it will find oil? Sometimes it doesn't, sometimes it is "lucky".

I suspect that the HMRC will look at the number of transactions from mining over time and determine any profits as retained income.  However, for those just sitting on a bitcoin stash which doubles in value, that would be a 1-time fx gain and not be regarded as income. Capital gains tax may apply though.

I think it's an interesting take, but I'm not sure I'd like to be the one explaining it to Mr Taxman when he comes a-knocking.

Any comments on my thoughts? 

In regards to mining BTC and income tax I have a few thoughts of myself:

According to HMRC income from gambling activities is not subject to income tax.
Then I thought to myself - isn't mining just a type of gambling? - you are basically trying out your chances of finding a specific hash thought mathematical operations, right?
So if you mine some coins and then sell them, doesn't that constitute income from gambling, therefore no income tax is imposed?

Or one can take it even further - if mining is not considered gambling at what stage does the income tax come into effect? - when produced or when sold?
If it is when sold, what stops you from putting these coins in SatoshiDice and then sell the winnings for fiat currency, which in effect will mean you are not liable for tax. Obviously there is no way for HMRC to know if you really gambled everything you mined with SatoshiDice, so they will just have to take your word on it.

I offer the following:

http://www.hmrc.gov.uk/manuals/bimmanual/bim35410.htm

I was curious about how crops are taxed.  Reading the above with bitcoins in mind, one could see how mined coins could represent the 'fructus industrialis' arising from the investment in planting the mining trees.  Of course, until there are rules, different individuals (including different experts and advisors at HMRC) will come up with different approaches when asked, but I think a case could be made that mined bitcoins are 'inventory' produced by one's 'industry', and possibly only become taxable when they are sold.

Either way HMRC gets it's fare share of the proceeds in the long-term.

It's interesting that reference to mining (for minerals) is made in the above discussion about taxing of a cherry-tree crop.  I wasn't searching for or expecting to find anything mineral-mining related.  The (very tentative) suggestion might be that bitcoin mining isn't all THAT far from mineral mining, in the sense you make a capital investment, which over time produces inventory, which you then sell for currency (income), and pay tax on receipts.

---

EDIT to add the obvious:

Business expenses paid in earned BTC were tax-free-earnings in the first place - whether the recipient declares them if appropriate is not the problem of the paying company (unless they are paying in BTC to assist the recipient in avoiding tax) - probably, there is no problem with minimising paperwork and exchange fees by paying a supplier in BTC directly from mined bitcoins (or boxes of harvested cherries), unless they are an employee.

Mining is self employment.

You should pay income tax based on the bitcoin value at the point it was mined based on that day's exchange rate.  It is then your asset.

You should then pay capital gains on the difference between that and the value you later sell it at.

Individuals have a capital gains allowance of £10,900 this financial year, so unless you are very successful or selling something else (e.g. second property) in the year you probably don't need to worry about capital gains.

Very Interesting post.

So how do miners sit in regards to Tax.

Lets say I mine 50 BTC a Month and Sell them 50 BTC for £50.00 Pounds each, total = £2500 pounds.

Do I pay Income Tax at my Current rate, PAYE + BTC's Sold  or Do I pay CGT at 18%.

Thanks to all in this thread. Helpful to know (and read on the HMRC site) about assets, CGT and CGT allowances. Makes me feel less anxious about selling small quantities of 'mined' coinage!

Correct. You would only be required to fill in a tax return if you sold your BTC and made a gain of more than the annual limit. If you merely hold an asset, there is no obligation whatever to tell the tax authorities.

It is quite simple. If you trade BTC then you are liable for income tax on the profits. If you hold them for gain then you are liable for CGT at the time of disposal. Disposal for this purpose means converting the BTC into some other asset, whether fiat or anything else. Generally speaking for larger profits, the CGT liability is preferable because the rate is lower (28% versus up to 45% + NI). It is no different from trading or making capital gains from foreign currency (the only currency asset that is CGT free is the gold sovereign).

You've nothing to worry about unless you are already filing your own tax return every year.  If you are, then do file this year as well as a consistent record prevents time consuming audits.

Ah ok.

So as long as I don't sell of my remaining coins, few as they maybe, I'm good right now and don't have to file/declare any thing to any one?
I'm quite a paranoid person fearing the tax man knocking on my door.

No.  Work is subject to PAYE and NI and taxed at combined rates over 50% for a lot of people.  Bitcoin trading is a capital gain and subject to a much lower rate of tax; normally 18%.

And yes, it is strange that the tax on the way the rich earn money is way lower than the tax on the way the poor earn money.

In your case, all of your earned income and your speculative income is tax free.  Congratulations or something :S

Ok, thanks. Is the money I earn from work (a measly £4500-£6000) included in this threshold with the BTC profit, or are they considered separate?

Damn my school teachers many years back for saying we don't need to learn about tax as in most cases it is automatically taken from you.

http://www.hmrc.gov.uk/rates/cgt.htm#1

No tax due as you didn't make enough money.  Also if you started in March, your £5000 gain is spread over 2 tax years so should be pro-rata taxed if you get to a total gain over £10600 in this tax year.

Can someone clarify the points here, sorry I've had to deal very little with tax as my wages are paid using PAYG so it is taken from me every month.
Starting from early March until last week I sold off the majority of my coins which gained me around £5000.

Am I liable to pay any sort of tax on this?
As my bank account has had numerous deposits go in from the sale of Bitcoins, I don't want to some how be reported for avoiding tax

Thanks.

In my experience - if you're not sure that what an 'official', tax man or otherwise is actually really true and in law, then tell them to point it out in black and white.

There is a LOT of corruption in the UK, and a LOT of stuff that banks and tax people and bailiffs and police do are NOT actually legal.

And most of the time, it's not even their fault .. they're just doing what they get told to do, even if its against the law. I've forgotten the experiment now.. how people blindly obey obedience if it comes from a figure of authority.

I don't blame them, I blame the people who are telling them and the system. But I DO blame them when you point out the law, or ask them to point it out, and they start going "lalalalalala, you must OBEY ME OR YOU WILL BE LOCKED UP AND YOUR FAMILY WILL STARVE!"

"Ignore the law.. nothing to see there.. move along"

Totally agree.

Plus I would add that the advice that you get from any agency isn't foolproof.  If they say one thing, it doesn't mean someone else from the same agency won't say something completely different!
Don't think you can use your quote as the 'Word of God' because until there is a law or at least a legal presidence, its all opinion!

I learnt the hard way with a 6 month bounce around the houses when I found an issue relating to a vehicle construction law that no government agency would define but others were happy to enforce without definition!

The discussion clearly shows the large grey space Bitcoin exists in, within the context of HMRC currently, what ever way you shake it.

Consider their stance for a minute. All of a sudden, they are getting inquires about this new-fangled crypto bit thingamajig somefingorother. They will make initial judgements based on their existing framework, and tables, flow diagrams etc. Without doubt, an invitation to produce whatever result you wish, depending on who you speak to. So what if you tried to escalate your inquiry to the decision makers? Are they going to commit to a defined process concerning the treatment of bitcoin for income/tax/CGT etc? And are they going to do that soon? Cant see it yet, personally.

So, is it not up to businesses that have bitcoin at the core of their trade, to decide how they declare bitcoin on their EOY accounts. Moreover, wouldnt it be logical for HMRC to sit back, wait to see how businesses declare bitcoin, monitor and number crunch its effect and consequence etc etc, and over time, take a defined stance?

Point being, its too soon to specifically define its tax route. How many returns in the last tax year shows a meaningful declaration of £BTC? Hardly any i would have thought?? So for now, its up to us/business to take their choice of the current recognized route i.e. if its 'money', its VAT exempt, but more costs associated with FSA issues, if its a commodity, it attracts VAT, and how income tax, can or cant be off-set, etc etc.
Basically, take your choice. Not ideal i know, but at least you are declaring something, and if and when HMRC want to argue your returns, they are then, setting the precedent.  

  

Next time ask them to point you in the direction of the law and governance covering such this (seriously).

Also, how is it treated as buying/selling a foreign currency when it is not recognised as a currency.. Again, I think it should be treated this way. But until it says it in the law it is not .. no matter what me or anyone says on the telephone. Want points of law, links, show it.

Check my post above to see/understand for yourself how Capital Gains Tax simply doesn't cover it. Unless there's chunks of Capital Gains Tax law that I'm missing, and if I am, please point me in the direction, because HMRC can't seem to.

Think I'll be contacting HMRC myself over the next week or so to try to get more clarification..

bitcoin is: a personal possession asset

Where exactly is this stated?

Section/paragraph/line

http://www.hmrc.gov.uk/cgt/possessions/basics.htm

I'm guessing you're looking at -

Typical taxable possessions
Personal possessions that may be liable to Capital Gains Tax when you sell or dispose of them include:
jewellery
paintings
antiques
coins and stamps

These are examples of assets that you can physically touch and move, ie they're tangible and moveable, and special rules apply.
The special rules mean that you don't pay Capital Gains Tax on:

Your private car.

Personal possessions that are individually worth £6,000 or less at the time you sell or otherwise dispose of them. This covers many household articles such as fridges and sofas. But there are slightly different rules for assets that form part of a set - see the section on 'sets of possessions' below.

Most personal possessions that are 'wasting assets' - these are assets with a limited lifespan that often lose their value over time. See the section on 'wasting assets' below.

Might I point out the bit I highlighted.

Bitcoins do not fall under 'asset' description for Capital Gains Tax. If I am wrong and there is certain areas that indicate intangible assets then I'd be happy if you could show me please.

Also - you do not 'posses' bitcoins, they exist within the blockchain. What you (and I) have are keys that give us access to certain (ours) amount of bitcoin.

And a bitcoin contains 10000000 Satoshi's, it is not a 'whole' individual item. So until a Satoshi is worth £6000 (making a single btc worth 60 quadrillion (roughly, couldnt be arsed to count all the 0's) then bitcoin again does not fall under capital gains tax.

Capital Gains Tax: 0
Bitcoins: 1

But ye, if I'm wrong, please feel free to point me in the right direction (links).

I just called HMRC about this (13th April 2013), to at least tie down capital gains vs income tax

The first advisor had not heard of it but passed me to someone who had

The advice was very clear. For a UK taxpayer buying and selling bitcoins :

"buying and selling Bitcoins using your own money definitely comes under capital gains tax"
HMRC telephone advisor 13th April 2013

The advisor explained that it is treated like buying and selling a foreign currency.  

I asked if it would ever come under income tax and the answer was 'only if you were using other people's money to buy and sell, for instance running an investment scheme' - (not that pirate at 40 cares I imagine:-)

We didn't discuss mining income, or VAT for businesses.

Thought this might be useful for others. Of course I can't guarantee you'll get the same answer from a different advisor at a later date but this was at least a very clear statement of HMRCs current policy.

Thanks franky1.

So, why do you think the banks do not accept Bitcoin?

It has a value, it is quite popular, like any software it can be defined as intellectual property so the accountants can take it into account (no pun intended), yet no Bank will touch it with a barge pole.

Why?

Let me give you a hint - it is the same reason Wall street institutions will not invest into and speculate with Bitcoin.

lol

thats where you are clinging at straws.

saying that assets might be chattels .. emphasis on might be and then using dictionary definitions of chattels to try and make it seem like all assets HAVE TO BE tangible.

the important thing is that assets are things that you own. the words "such as" are just examples, not a set in stone list. this is why i, in the first post defined that its not a share, its not a ....(well you read it.)

assets are property owned by you, objects, possessions and even intellectual property(graphic design, programming code, names, trademarks etc). HMRC, and solicitors will NEVER make it a finite list set in stone of what constitutes a personal possession.

so the question to leave you with is to define intellectual property, which in many cases is not tangible.

alot of people want to call bitcoin a commodity due to gold being a commodity, and that when asked the deeper question why is bitcoin like gold, their reply is "because you mine it." which is just a silly reason.

what if the mining program, due to use of computers and elliptic curves was called 'vectoring' much like art work/graphics design/games developers uses vectors. Art/graphic design material is not a commodity, but is an intellectual or tangible property.

J-lo (jenifer lopez's) buttocks are not stated on any tax related material as being an asset, nor on any legal documents about tax. yet they clearly are her assets. owned by her and have major value. hence why she has a million dollar insurance on them.

a surgeons hands are his assets. athletes/ sports peoples ligaments are assets. as i said before HMRC do not limit assets to just these items on the page. it is just used as an example.

and as for the scenario for a bank loan that dadj mentioned there are 2 things to note
1. if i walked into a bank and got asked what assets i had and i said i only have 2 metal coins in my pocket. at first the banks would think im crazy. but after explaining the coins are the rarest coins in existance and worth X amount, they would change their minds. so its all about explaining it. much like carrots
and you would be surprised to find alot of corporate banks know what bitcoins are now. a few people in the UK have hinted to banks about digital currency and the banks themselves have said "your talking about bitcoin" and then the bank was ok with continuing with that days transaction.
2. if you had £200,000 worth or bitcoin in storage and earning £10k a month why would you take out a loan. ud be tied into a loan for 10 years where every single monthly bitcoin earning would go into loan repayments.. id put that money into a company EG buying T-shirts for £2 and selling them for £5 and reaping a 100% profit after costs. to net you £20k a month.


but getting back on topic. all assets have CGT possibilities. your car can be CGT'd so not paying capital gains tax on a cheap car is not avoidance. its just purely the fact that your car only cost £4k to not be liable for it. its not avoidance. its playing by the rules and knowing what your entitled to.


just remember to put any profits which you then spend on your lifestyle as income and pay tax on your income

and that's the end of my brain fart...

if you are still at all unsure, then go see an accountant. if you are 100% satisfied that i am on the right path, due to the discussions i have had with accounts then please still go see your accountant. never take anyone that you cant slap with a wet fish, advice at face value.

How would you classify a programming code, software in the above list?

What about patented mathematical algorithm that has no tangible value, but the patent protecting it defines its commercial value?

Or digital goods that one cannot actually touch or move, but they are tangible and exist in reality, one can barter them for tangible goods or trade them for legal tender, can they be considered assets?

So many question, so little answers...

Dadj, thanks for the points you have made. While I somewhat disagree with your arguments I do agree with your conclusion.


How about you telling them  "I have 10,000 kg of carrots and produce monthly  500 kg of carrots that I can sell on the open market". Would they give you a loan? This one can go both ways, I guess. There are plenty of people who would be happy to provide loans with Bitcoin used as a collateral.


Surely yes, I would expect them to take it as serious as if someone was conned out of lots of carrots.


This one is by far the most interesting point. Indeed there is no precedent defining bitcoins as an asset (is there?). There was actually a report previously that HMRC had an opinion that they do not care about bitcoins until those are converted into fiat. I would say that this point of yours is indeed very valid. If they wish to enjoy an opportunity to tax Bitcoin as an asset they should treat it as such.

In an ideal world they would classify it as money and treat it for tax and all other purposes as a foreign currency. This would be the best thing that could ever happen to Bitcoin, paradoxically. Meaning no VAT and no legal uncertainty and therefore less barriers for businesses of all sizes to start using Bitcoin. Who knows, maybe tax authorities will indeed be the first who legally define what Bitcoin is. They cannot have their cake and eat it.

Hi franky1

I read the HMRC page and came to the conclusion that Bitcoin should not be considered an asset. Here's why:

(From the glossary page of HMRC):

(From the dictionary):

Whilst you and I both have a fair knowledge of what bitcoins should be, the legal precedent has not yet been set. Not only is it unclear whether Bitcoin is a chattel, it is also unclear whether it is considered an asset.

For example, if you walk into the bank to ask for a loan and they ask do you have any income or assets - would you respond "I have 10,000 bitcoins and a monthly income of 500 bitcoins" and expect them to approve a loan for 1 million pounds?

Or if you are scammed or hacked out of all your bitcoins, would you rely on the police to investigate your claim that your bitcoins have gone missing?

If bitcoins were clearly defined as an asset then these problems that exist today would not be so difficult. My opinion is that when the governments decide to define bitcoin as an asset, then they should be able to fairly collect CGT tax.

edit.

read my first post, ill refresh your memory:
bitcoins are not a division of a percentage of ownership of a company (shares)

now your refreshed. shares are not person possession assets. they are, as quoted on the HMRC page "Shares, unit trusts and other investments". which have their own category for how they should be treated when it comes to capital gains tax.

i read the whole HMRC document and seeked guidance from accountants. but its obvious that selective reading has happened in your case.

in your scenario. you talk about FIAT.. legal tender, yet again is NOT a personal asset.
what your scenario suggests is what banks do for loans. the closest scenario to yours that involves bitcoin is more like what pawn brokers do, buy jewellery cheap (giving the customer FIAT), knowing people pay by installments at a bigger fee to get it back.. and all that blah blah.
but the simple answer to that is that you AS A COMPANY would be paying corporation tax. (like income tax for non companies).

again you dont seem to know what category to put bitcoin into which is why you will be in the most trouble when it comes to paying your taxes.

treat bitcoin as a retail tradable product (asset) and not a company shares scheme. FIAT loans as they are a whole different kettle of fish and you will start to see the light of day of how to treat bitcoins.
if your a company, your like a pawn broker, antiques dealer, coin collector,etc,etc
if your an individual your just buying and selling valuable assets(antiques, merchandise, products) like selling your antiques you find in your attic on ebay.

by trying to say in one hand bitcoin is a company share, another hand bitcoin is FIAT and in a third hand its something else. just means you dont know exactly what it is.

and to the other poster. so 100,000,000 satoshi's are not a well known grouping also known as a bitcoin.. ?? come on everyone knows 100,000,000 is a bitcoin. and Luke JR has proven himself limited in his understanding of things. take his obsession with editing the litecoin with lies and false statements. its far better to go seek advice from an accountant or specialist then to take luke-jr's word as gospal

the term 'set' is about there being a known , name, group, set, collection of an amount of individual items together.
if i bought a 1 seater sofa for £1k a 3 seater sofa of the same make, model brand for £5k and that formed a known furniture set. (suite of furniture) then it becomes a set. even if the value of them combined is no different to selling separate, that are classed as a set.

if i bought a brown single seater sofa. and then bought a blue 3 seater sofa from totally different brands that d not form a known set. then its not a known set.

if i bought a 1960 Gold coin a 1962 silver coin and a 1963 bronze coin. totally different. but if in the collectors world they were known as the 3 rarest coins and if owning these three coins together you became the owner of pfft.. "the mint 3" (imaginary name) then thats a set.

i know its confusing about what a set is or isnt. but thats where a dictionary comes in handy and specialists too.

now until bitcoin gives a known title to .. pfft 500BTC for instance, and calls is pfft "MegaBlock" for instance, and people started selling them as megablocks everywhere. then it gets really fun trying to decide if thats a set or not.

but because a megablock is a made up name by me, its something we dont have to worry about. the important thing to learn from this lengthy topic of people poking at each others description is that until 1 BTC is worth £6k each you got no worrys about capital gains tax. the only worry is income tax if a individual or corporation tax if a company.

now instead of arguing with me on a forum. get down to your local accountant.
here endith the lesson

Luke-Jr would disagree. The units are totally arbitrary. There is nothing special about the number 100,000,000 that makes 100,000,000 satoshi anything more than just 100,000,000 satoshi. You might as well say that 12 ounces of gold are a "set" because you have a "whole" pound.

Send out your 6 chairs individually. And watch the delivery fees stack up. Doesn't matter whether the chairs are part of a set or not. It doesn't make the chairs "more valuable" for the recipient to receive them in a single shipment, it just means he has to pay less fees. The market value of the chairs is exactly the same regardless of what fees he had to pay. And the same goes for bitcoins.

I think franky1 is essentially correct on this one. (And no I am not an accountant!!)

But HMRC still win, if you dont pay CGT you will pay income tax on it and for many people this is just as bad, so this is no biggy. (No big loophole, I mean.) 

The point about 'sets' is this. If I buy 6 antique photographs for £1100 each you cannot class it as 6 seperate purchases, you have to class it as a set and as such it will be over the £6k limit.

The OP's point is that there is no rationale  for any particular 'set' of Bitcoins, so they must be treated as individual units.

wow the amazement of some people.

1.a set is when many smaller pieces are combined to create a grouping
2.a set is when many pieces kept together hold more value then splitting them up dispersing them out

ok.. now some practicals.

1. get 100,000,000 satoshi's .. would you call them a bitcoin or 100,000,000 satoshis with no formal name
2. send out your 100,000,000 satoshi in groups of 20,000 or individually 1 satoshi each you a single person. and watch the transactions fee's stack up. now is it more valuable to the recipient to receive it as a full bitcoin and keeping them as a full bitcoin to reduce/avoid transaction fee's when moving to and throw... instead of broken up losing him some satoshis selling/trading them individually.?

Half a bitcoin is not worth any less than half the value of a whole one. A satoshi is worth exactly 100,000,000th of a bitcoin. A bitcoin is worth exactly as much as the sum of its parts. A bitcoin does not by any stretch of the imagination meet the definition of a "set of possessions".

You cannot bring rules for capital gains for "wasting" "personal possessions" to bitcoins. Well.. you can but HMRC will disagree. Otherwise I would buy 1000 shares of GOOG for 100$ each (a few years ago) and start selling them in "sets" of 10 shares for 6000£ profit tax free. It would take only 3 month of daily sales to avoid capital gains tax on 6000000£ profit. Nice fantasy.

The only fail here is yours, unfortunately. Sorry for disappointing you.

However, here is another scheme. Start a limited company, loan it some of your bitcoins. Sell those bitcoins as a company, borrow some fiat from the company at some very low interest. There is no tax event for capital gains in this case. I am not quite sure HMRC would be very happy about this scheme either and not sure if this would be legal at all.

{facepalm}
lol read the HMRC link PPLLEEAASSEE

.. hang on ill save you the trouble

no £7k in sight

and also individual tax allowance is a separate thing again.. which is £8105

double fail but thanks for reading

That would only be true if an individual sold only one "set" per year. Do not mix individual annual tax free allowance for capital tax with whatever fantasy you came up with. "Individual" here refers to a person, not to a piece of Bitcoin or a carrot.

Also it is not 6000£ it is 7000£

Hence, most of OP is BS. Sorry.

EDIT: to highlight a point that may have been missed further down: you are though still liable to income tax, aswell as those in your family if you gift them the coins if an individual or corporation tax if a company

but to clarify the point on capital gains tax that has been asked many times on different threads. in the UK, bitcoins are free from capital gains tax, because they are an asset(personal possession) which is under the CGT threshold of £6000 each.

now the long answer to explain why

bitcoin is: a personal possession asset
remember an asset is a product that stores value. such as art, antiques, your car. Things that cant really be used or changed into anything else but its sole purpose. it is an end product.


what bitcoin is not:
bitcoins are not a commodity.
remember a commodity is a basic good/raw material used in commerce for the production of other goods or services.
do not get confused by the stupidly named method of making your asset being called mining, to think of them as anything like gold.
bitcoins are not a division of a percentage of ownership of a company (shares)
bitcoins are not a division of a percentage of ownership of a product a company holds (stocks)
bitcoins are not the purchase of government debt (bonds)

unless a single bitcoin (set of satoshi's) gains the value of £6000 EACH you don't have to worry about capital gains tax. you can own as many assets and sell as many assets but as long as the individual value does not exceed £6k each your safe from capital gains tax.
EG i can have a picasso, a Monet, and a Rembrandt (paintings) and sell them all to one buyer at the same time and they would not be classed as set. unless they formed a well known grouping OR gave them much more value sold together then the combined total of selling them individually.

bitcoins do not come in sets. as there is no finite amount of bitcoin units to say you have a complete 'set'. there is no general term for (EG 500BTC) groups that everyone is aware of or comfortable to use in daily conversations that gives a set group of bitcoins more value selling them as the group then the combined value of selling them individually.
so treat a bitcoin as a sole asset or a 'set' of satoshi's.

so unless 1BTC or 100,000,000sat 'set' became £6k each, you have got no worry's about capital gains tax. just worry about income tax if your an individual or corporation tax if a business.

speak with an accountant for a more deeper explanation of assets or read this
http://www.hmrc.gov.uk/cgt/possessions/basics.htm

hope this makes sense

edited parts to make it simple to understand to the lay man

please consult an accountant before taking ANYONES word as gospal