I think by now most people will have heard either of these terms, but not always in a positive way.
A Bitcoin is probably the most recognisable of cryptocurrencies, but what are they? For starters, they are not something physical that you can put in your own wallet or purse. However they are generally held online in a virtual wallet. They can bought and sold online in the same way that any other currency can. In addition, they are increasingly being accepted as a payment method for services, although governments and banks throughout the world take differing views on this.
Some may consider cryptocurrencies to be a risky purchase, however more and more people are holding cryptocurrencies such as Bitcoin and with values increasing over last 12 months, tax issues will need to be looked at.
The starting point will be to look at who holds the currency. Is it a limited company, partnership or an individual? Once this has been established then the tax treatment can be reviewed further, but also brings with it further questions. Why is it held? Is it a trade or an investment, or is it gambling? Whatever the treatment, it is important that full records are kept as HM Revenue and Customs can ask to see these if a tax return is enquired into. Who said tax is boring!
If you would like further information, please speak to your usual contact or to Peter Crozier on 01793 603900.