Bitcoin (BTC) was the first cryptocurrency that became well-known. Bitcoin, like many other digital currencies, lets you send money online without going through a bank or other third party. At first, all Bitcoin transfers were secret, but now it’s easier to find out who did what.
“Mining” for Bitcoin means finding a certain formula. This can be done on a regular computer or one that is designed to do it. There are also places like Coinbase where you can buy Bitcoin.
In the UK, bitcoins are assets that are taxed.
When Do You Have to Pay Tax on Bitcoin Earnings?
If you make bitcoins by mining, that’s income, and you’ll have to pay Income Tax based on how much they’re worth in British pounds. You may also have to pay National Insurance. So, you can write off the costs of your mining gear, like computers, power, and repairs.
You might have to pay Capital Gains Tax (CGT) on the profit if you sell Bitcoin for more than what you paid for it.
What should you do if you lose?
For bitcoins you mined, you can deduct this loss from other income. For bitcoins you sold, you can deduct it from capital gains. You can do this either this year or next.
Taking a loss forward or balancing it is what this is called. There is a form you need to fill out in order to claim a loss or pay Income Tax or Capital Gains Tax on the money you made from bitcoin.
