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Crypto: capital gains tax vs income tax

What happens at the switchover from investing in cryto to trading.

Didn't find your answer?

I'm aware that gains from investing is liable to capital gains tax. I'm also aware that income from trading is liable to income tax. I'm not asking what counts as trading and what as investing. My question is, what happens at the threhsold between the two?

Consider: I bought 1 bitcoin ages ago for £100. Today it is worth £10k, and I deposit it as collateral on an exchange and open a leverage long position. A month later, when bitcoin is worth £20k, I close the position and get my original 1 bitcoin back and £10k GBP profit. 

Obviously, the £10k GBP I received counts as income from a tax perspective. But, what about the bitcoin? Does this count as a 'sale' @£10k for capital gains purposes when I opened the position? And does it count as a purchase when I close the position, this time @£20k? Or perhaps there is neither a sale nor purchase from a capital gains perspective, it is like I held onto it the entire time?

 

 

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By JoF
19th Feb 2020 08:35
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Replying to JoF:
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By proudfoot
20th Feb 2020 03:40

JoF wrote:

Did you forget your login?
https://www.accountingweb.co.uk/profile/proudfeet

Yes, and it said my username was not recognised when I tried to do password recovery.

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Replying to proudfoot:
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By JoF
20th Feb 2020 07:44

Probably because you were banned, given this is a site for Accuntants rather than members of the public.

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By The Dullard
19th Feb 2020 10:29

It's still liable to CGT, but the consideration for disposal and costs of acquisition are reduced by the amounts chargeable and deductible for income tax purposes. Now go away.

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Replying to The Dullard:
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By proudfoot
20th Feb 2020 03:43

The Dullard wrote:

It's still liable to CGT, but the consideration for disposal and costs of acquisition are reduced by the amounts chargeable and deductible for income tax purposes. Now go away.

Can you point to some reference/source that says that? I can't find it.

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By Wanderer
20th Feb 2020 07:54

proudfoot wrote:

Can you point to some reference/source that says that? I can't find it.

Your accountant will know where to find any relevant references required.
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