I just called HMRC about this (13th April 2013), to at least tie down capital gains vs income tax for a personal investment in bitcoin
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.
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.
Please can you share with whom you spoke at HMRC - was it just their normal help line?
I am figuring out how to treat the shareholder funds invested in CipherMine. Obviously we must not accrue CGT on them but I don't think that is a worry; my plan is to treat them as shareholder funds within Wood Tech or possibly a loan.
The more debatable area is the revenue share aspect. In theory all mined coins are our revenue, but HMRC only recognises fiat for tax purposes. Since we give divis direct to the shareholders I am hoping that means I don't have to declare them as income in Wood Tech's accounts. The only bit that would then be declarable would be the costs (power, maintenance and depreciation) plus the 50% hardware reinvestment fund. Since we are forced to depreciate computer hardware over 36 months I am expecting to make a taxable profit which is a bit annoying but can't be helped.
Kate.
