The Bubbly Bitcoin Thread -- Merged Threads

[Pup]

4 minutes ago, RodCrosby said:

No, the highest CGT  tax band is [still] 20%.

Basically, if your income plus taxable capital gain falls into the higher income tax band (>£50k), you pay 20% on the capital gain (or the proportion thereof that does fall into >£50k)

else you pay 10% on the capital gain.

If your income is > £40k you should invest £40k (from crystallizing £52.3k) in your SIPP.

else you should invest your income (from crystallizing income plus £12.3k) in your SIPP.

 

But the way the tax system actually works is mind-bogglingly good [ I did say the UK is one of the world's hidden tax havens - even for its own citizens ...LOL]

You are Quids In....

Effectively no CGT

A tidy extra profit, from nice Mr. Chancellor

The benefit of transferring an otherwise taxable investment into a tax-free growth environment.

Saving 40% IHT in the future (including on any growth)

Possibly other tax benefits, such as re-instatement of eligibility for child benefit

Works great until you hit the Pension lifetime limit which is now frozen for the next few years......

[RodCrosby]

One problem at a time, in this tax masterclass...

[BufferBear Bitcoin Bull]

27 minutes ago, RodCrosby said:

No, the highest CGT  tax band is [still] 20%.

Basically, if your income plus taxable capital gain falls into the higher income tax band (>£50k), you pay 20% on the capital gain (or the proportion thereof that does fall into >£50k)

else you pay 10% on the capital gain.

If your income is > £40k you should invest £40k (from crystallizing £52.3k) in your SIPP.

else you should invest your income (from crystallizing income plus £12.3k) in your SIPP.

 

But the way the tax system actually works is mind-bogglingly good [ I did say the UK is one of the world's hidden tax havens - even for its own citizens ...LOL]

You are Quids In....

Effectively no CGT

A tidy extra profit, from nice Mr. Chancellor

The benefit of transferring an otherwise taxable investment into a tax-free growth environment.

Saving 40% IHT in the future (including on any growth)

Possibly other tax benefits, such as re-instatement of eligibility for child benefit

Thank you for the clarification.  I muddled income tax and CGT rates.

[BufferBear Bitcoin Bull]

34 minutes ago, RodCrosby said:

One problem at a time, in this tax masterclass...

Indeed! 😁

And all good areas for me to explore.

 

You are Quids In....

Effectively no CGT

A tidy extra profit, from nice Mr. Chancellor

The benefit of transferring an otherwise taxable investment into a tax-free growth environment.

Saving 40% IHT in the future (including on any growth)

Possibly other tax benefits, such as re-instatement of eligibility for child benefit

[goldbug9999]

4 hours ago, warpig said:

They are... but you have to ask who's developing all the crypto-currencies for all the central banks... Someone has to provide the infrastructure... write the core code... write the API's, build the relationships with all the stakeholders and test it to death. It looks like it's Ripple... 

Which is all great but has nothing to do with actual decentralised crypto currencies.

[dannyf]

While we’re on tax, ownership/keys aside, opinions on whether you would prefer to own GBTC (grayscale) in a tax advantaged account with a 2% annual fee  or prefer self owned BTC with 15% capital gains tax rate?

That 2% could quickly add up over time and overtake the capital gains due is my feeling

[MonsieurCopperCrutch]

53 minutes ago, dannyf said:

While we’re on tax, ownership/keys aside, opinions on whether you would prefer to own GBTC (grayscale) in a tax advantaged account with a 2% annual fee  or prefer self owned BTC with 15% capital gains tax rate?

That 2% could quickly add up over time and overtake the capital gains due is my feeling

CGT is 20%. No?

[warpig]

1 hour ago, goldbug9999 said:

Which is all great but has nothing to do with actual decentralised crypto currencies.

I think it does... when they're ready to release their version, that's when I think they'll attack the traditional/public crypto currencies. If I ever get into the cyrptos, that's one of the signs I'll be looking for to sell up.

[markyh]

40 minutes ago, MonsieurCopperCrutch said:

CGT is 20%. No?

Dannyf is in the USA. 

[Confusion of VIs]

10 hours ago, warpig said:

No nothing yet... still don't think this is over... BTC is showing weakness IMHO. I accept it may go higher, but still think 60K is the interim top.

So the wisdom to be gained from the chart is - it could go up or down?

 

[MonsieurCopperCrutch]

1 hour ago, markyh said:

Dannyf is in the USA. 

Thanks. 👍

[markyh]

7 hours ago, Confusion of VIs said:

So the wisdom to be gained from the chart is - it could go up or down?

 

Best to wait until the move has happened and draw a few more lines to confirm it, then you can go back in time and take the correct position and ...... oh bugger, the trade in the past bit is impossible. 

[GlasgowLondoner]

Here is another tax question for anyone with time on their hands. I am running a few hypothetical scenarios, as I am happy to live abroad as I HODL (I have zero family ties in the UK and in that time I can gain new skills like a new language). The tax information online is confusing (and it mostly seems geared up to property, buy-to-let, believing the only asset people care about is a house).

My basic situation is this:

2013 Bought all my crypto holdings when living in EU
Lived in EU until 31.03.2016
31 March 2016 to 3 November 2020 UK resident
Not in any hurry to cash out of my crypto anytime soon

Can anyone point me to the best calculator or give me a suggestion of when, going by current legislation at least, I could safely sell my crypto (or just part of it) and then return to the UK?

Obviously, I would employ a professional, but I am trying to form a general picture at this stage... The main reason is that even 20% CGT could be a pretty penny a few years from now...

[markyh]

18 minutes ago, GlasgowLondoner said:

Here is another tax question for anyone with time on their hands. I am running a few hypothetical scenarios, as I am happy to live abroad as I HODL (I have zero family ties in the UK and in that time I can gain new skills like a new language). The tax information online is confusing (and it mostly seems geared up to property, buy-to-let, believing the only asset people care about is a house).

My basic situation is this:

2013 Bought all my crypto holdings when living in EU
Lived in EU until 31.03.2016
31 March 2016 to 3 November 2020 UK resident
Not in any hurry to cash out of my crypto anytime soon

Can anyone point me to the best calculator or give me a suggestion of when, going by current legislation at least, I could safely sell my crypto (or just part of it) and then return to the UK?

Obviously, I would employ a professional, but I am trying to form a general picture at this stage... The main reason is that even 20% CGT could be a pretty penny a few years from now...

Where have you been living since 4th November 2020? 

[GlasgowLondoner]

16 minutes ago, markyh said:

Where have you been living since 4th November 2020? 

Germany

[FTB-house-hunter]

16 hours ago, RodCrosby said:

Worked example

Suppose you earn £50k

Sell enough BTC to generate a £52.3k gain. After deducting the CGT allowance, you have a £40k taxable gain.

Tax due is £8K, as the gain is all in the higher 20% band.

Net proceeds after tax £44.3k  (if you do nothing more)

 

Instead, put £40k of your gain into your SIPP (the max you are allowed)

Magic happens... The grossed-up amount of £50k is added to your lower CGT band, meaning all of your taxable gain now falls into the 10% band! [and see footnote *]

Tax due now is £4k

But nice Mr. Chancellor has also given you an extra £10k to put in your SIPP.

Net proceeds after tax £58.3k  -  a full £6k more than you actually gained to begin with !

So you crystallized £52.3k and made £6k on the deal. [and £14k better off than doing nothing]

A higher-earning couple could potentially get rid of £104.6k profits every year, tax free, making an extra £12k on the deal, every time.

You (the couple) have also moved £80k into a tax-free growth wrapper, and also mitigated against IHT @ 40%.

You could also re-invest in a tax-free Bitcoin proxy inside the SIPP, if you wanted to, thereby staying invested "in" Bitcoin.

Could form part of an effective  DCA strategy.

footnote * there could even be more tax-savings, such as if you earn too much for Child Benefit, this strategy could mean you are entitled to them again, as your earnings are now deemed to be in the lower income tax band.

Ok, this is going to take some time to digest this information.  Think i need to google what ever a SIPP is as step number one!  Thanks for posting.

[RodCrosby]

1 hour ago, GlasgowLondoner said:

Here is another tax question for anyone with time on their hands. I am running a few hypothetical scenarios, as I am happy to live abroad as I HODL (I have zero family ties in the UK and in that time I can gain new skills like a new language). The tax information online is confusing (and it mostly seems geared up to property, buy-to-let, believing the only asset people care about is a house).

My basic situation is this:

2013 Bought all my crypto holdings when living in EU
Lived in EU until 31.03.2016
31 March 2016 to 3 November 2020 UK resident
Not in any hurry to cash out of my crypto anytime soon

Can anyone point me to the best calculator or give me a suggestion of when, going by current legislation at least, I could safely sell my crypto (or just part of it) and then return to the UK?

Obviously, I would employ a professional, but I am trying to form a general picture at this stage... The main reason is that even 20% CGT could be a pretty penny a few years from now...

There is no calculator. It is entirely dependent on the knotty rules previously discussed regarding the SRT.

And your issue is compounded by the fact you have dived out, then in, then out again from the UK. And... apparently intend to return again. You will need professional advice, because your situation is anything but simple.

However, it is possible [and I stress POSSIBLE] that your gains *may* not be taxable, because you say you acquired the assets while living in the EU. In other words, after you left these shores...

That is the first  thing you should explore... And then explore how to dispose of them abroad, and return without falling foul of the SRT.

Some info here:-

"Some gains and losses arising during periods of temporary non-residence are not within the scope of these rules. An individual may acquire assets after leaving the UK for a period of temporary residence abroad. If such assets are disposed of in that period, any gains or losses on such assets are not normally treated as arising when UK residence is resumed."

https://www.gov.uk/government/publications/temporary-non-residents-and-capital-gains-tax-hs278-self-assessment-helpsheet/hs278-temporary-non-residents-and-capital-gains-tax-2019

But don't adopt a DIY approach. Get proper advice from an expert.

Edited March 6, 2021 by RodCrosby

[RodCrosby]

1 minute ago, FTB-house-hunter said:

Ok, this is going to take some time to digest this information.  Think i need to google what ever a SIPP is as step number one!  Thanks for posting.

https://en.wikipedia.org/wiki/Self-invested_personal_pension

[markyh]

7 minutes ago, GlasgowLondoner said:

Germany

Pretty sure you are a uk tax citizen until 184 days in Germany, early May. Then you are a German Tax resident, but if you sell and return to the UK within 5 years , you may be liable to UK CGT. 

If you are planning to stay in Germany until 2026, then dont worry about it. you have held for more than 12 months so you will have 0% tax on Crypto. 

Move to anywhere else in the EU, not so sure the rules. But talk to a German accountant with good knowledge of the UK CGT system before selling is the best route.

[GlasgowLondoner]

2 minutes ago, markyh said:

Pretty sure you are a uk tax citizen until 184 days in Germany, early May. Then you are a German Tax resident, but if you sell and return to the UK within 5 years , you may be liable to UK CGT. 

If you are planning to stay in Germany until 2026, then dont worry about it. you have held for more than 12 months so you will have 0% tax on Crypto. 

Move to anywhere else in the EU, not so sure the rules. But talk to a German accountant with good knowledge of the UK CGT system before selling is the best route.

 

Thanks for the basic advice. I just wondered if buying in 2013 and not being a UK tax resident until 2016-17 might count for something to whittle down the six-year rule.

I would not be able to stay anywhere else but in Germany because of Brexit. I have residence here (for now), but any other EU country would be out of the question after Brexit... [of course, if BTC were to explode in price, I would move to Monte Carlo forever!]

[wighty]

24 minutes ago, FTB-house-hunter said:

Ok, this is going to take some time to digest this information.  Think i need to google what ever a SIPP is as step number one!  Thanks for posting.

How old are you and what's your earnings roughly?.

[markyh]

14 minutes ago, GlasgowLondoner said:

 

Thanks for the basic advice. I just wondered if buying in 2013 and not being a UK tax resident until 2016-17 might count for something to whittle down the six-year rule.

 

Way beyond our scope here to understand, you need an accountant, who knows German and UK rules for your mixed resident history, i have no idea if that matters. All i know is if you sold any as a UK tax resident above the tax free limit,  they will want their cut , for sure. 

 

[RodCrosby]

33 minutes ago, markyh said:

Pretty sure you are a uk tax citizen until 184 days in Germany, early May. Then you are a German Tax resident, but if you sell and return to the UK within 5 years , you may be liable to UK CGT. 

If you are planning to stay in Germany until 2026, then dont worry about it. you have held for more than 12 months so you will have 0% tax on Crypto. 

Move to anywhere else in the EU, not so sure the rules. But talk to a German accountant with good knowledge of the UK CGT system before selling is the best route.

The rules are very complex, and I'm not sure any of the above is correct.

And I would be talking to an expert British Accountant, not a German one, as apparently your problem will not be with the German tax authorities, but the British !

Start with an exact list of dates of your movements between countries over the past 15 years, and the dates you acquired your crypto.

Edited March 6, 2021 by RodCrosby

[RodCrosby]

14 hours ago, dannyf said:

While we’re on tax, ownership/keys aside, opinions on whether you would prefer to own GBTC (grayscale) in a tax advantaged account with a 2% annual fee  or prefer self owned BTC with 15% capital gains tax rate?

That 2% could quickly add up over time and overtake the capital gains due is my feeling

You will have to crunch the numbers, and see. It will always depend on how the 2% is charged, on the crypto cycle, when you intend to get off this ride, and the precise tax laws of your jurisdiction.

[markyh]

24 minutes ago, RodCrosby said:

The rules are very complex, and I'm not sure any of the above is correct.

And I would be talking to an expert British Accountant, not a German one, as apparently your problem will not be with the German tax authorities, but the British !

Start with an exact list of dates of your movements between countries over the past 15 years, and the dates you acquired your crypto.

True, but once in Germany long enough to be a tax resident, which i pretty sure their rules are over 183 days, the UK is then irrelivent if you never really return apart from the odd 2 week holiday. Dont matter what HMRC think, if you have left the uk, you have left the uk. 

It's only if and when you return as a uk resident that has to be considered. If you have no plans to return, and cant be forced to return by visa' exipring etc, then why worry?