Bitcoin investors have been warned to get their affairs in order ahead of the 2016-2017 self-assessment deadline on Jan 31st.
Since last year’s cryptocurrency boom there are many who have profited significantly off of the rapid increase in value, and who may be unaware that HMRC considers bitcoin as “profits being subject to capital gains tax”.
Ed Molyneux, co-founder of cloud accounting software firm FreeAgent (via CityAM), said: “There does not appear to be a definitive answer on the issue yet, which could cause confusion among investors.”
It is indeed quite confusing, as the conclusion to the tax question depends on whether bitcoin is considered currency or investment. While the latter is subject to being taxed, the former is not.
“Whether any profit or gain is chargeable or any loss is allowable will be looked at on a case-by-case basis taking into account the specific facts,” HMRC explained.
Investors are advised to get in contact with HMRC directly if in doubt.