Investment in Bit coins

[Tushar Shah]

I have invested £10,000 in bitcoin on May 2014 from personal account and now I am planning to sell and expecting £90,000.

I have some of the bitcoins into a crypto currency project as a speculative buy and also used those bitcoins on crypto exchanges to trade bitcoin and other crypto currencies. This is similar to the Spread betting.

I am contractor and running my own limited company where I am drawing salary and divided sum of £45,000 for the year.

 Selling of bitcoin will triggered any capital gain? As I believe any gain from speculative activity is exempt for capital gain purpose.

 If I will sell bitcoin in £90k what will be my capital gain and tax liabilities?

 Is there any way I can mitigate this liabilities?

 Does offshore trust or bank account help to mitigate the liabilities?

 It will be better to do this as individual or create a new limited /Investment Company registered somewhere.

[AGoodman]

See the other two threads on Bitcoins, which provide plenty of technical detail. You are selling an asset so subject to CGT on a gain of £80,000. After your personal allowance of £11,100, you would pay 20% CGT: £13,800 approx.

Spread betting is not taxable but it is not spread betting if you are actually buying and selling crypto currencies. Spread betting is simply betting whether the price of the currency (or index) will rise or fall and you never own the currency itself. If you have been buying and selling these currencies then you may also have made other gains and losses that must be taken into account for CGT.

There is no exemption for speculation - all investment is speculation to some degree. The fact it is high risk is irrelevant.

I can't think of anything that would assist you - be grateful that CGT is currently so low. You would not be able to get them into a company without triggering a gain and any gains made by a company would be subject to 17% corporation tax plus further tax to get the profits out of the company again. Equally, you are liable for worldwide gains so a foreign account would only help you if you were non-domiciled and arrived in the UK in the last three years (so can claim the remittance basis without paying the charge of £30k+).

Your only option is to maximise allowances, either by selling over two tax years (which would mean hanging onto some until 6 April 2018 (which would carry risk) or, if married, pass some to your spouse to sell and use their allowance.

[Tushar Shah]

Thanks