Bitcoin was one of the major financial success stories of 2017, with the cryptocurrency’s value skyrocketing in value last year. That has tailed off a bit in the New Year, but such was Bitcoin’s upward curve that it accrued a lot of new investors in recent months, some of whom may not be overly familiar with their tax obligations regarding ownership and use of Bitcoin.
As with traditional currency, you will most likely be liable for tax on Bitcoin. If you make a profit from any Bitcoin investments, you will be obliged to pay tax on this, even if you don’t intend keeping this profit for yourself. A portion of Bitcoin profit may be exempt from taxation, though, so it’s worth finding out the figures in relation to this.
Also, you will most likely be entitled to deduct certain items from your Bitcoin tax bill. For instance, the costs of any assets purchased with Bitcoin, or any indirect costs involving the acquisition or disposal of these assets, can be deducted. You can also deduct mining expenses earned from verifying Bitcoin transactions, and you’re entitled to make adjustments to allow for inflation.
The people at All Finance Tax (http://allfinancetax.com/capital-gains-tax-returns/) put together this infographic which explores your obligations and rights regarding Bitcoin taxation. There is some helpful advice for users of the cryptocurrency as to the management of their Bitcoin taxation activity, with information on the subject largely obscured by reports on the cryptocurrency’s fluctuating value. Have a read below.