Digital money that is decentralised is known as cryptocurrency, or simply crypto. There are now over 1500 distinct cryptocurrencies in use, and it is exclusively available online. The primary distinction between cryptocurrency and conventional (fiat) currencies is that the former are managed without interference from banks or governments, or alternatively, they are decentralised.
Is cryptocurrency the same as virtual currency? #
Simply put, no. Cryptocurrency differs from the funds in your virtual bank account.
Several well-known cryptocurrency instances include:
- Bitcoin
- XRP
- Ethereum
Why bother with cryptocurrency? #
This is a really general inquiry. Cryptocurrencies come in a wide variety of forms, each with a unique history. While some, like XRP, aim to reduce the difficulties associated with conventional international money transfers, others, like Bitcoin, are both digital currencies and investment instruments. An intriguing use of cryptocurrency that has gained attention lately is the trade of digital art.
Do you have to pay any taxes if you possess cryptocurrency? #
Your cryptocurrency mining earnings are considered self-employment income.
You may be required to pay Income Tax and National Insurance on profits from self-employment exceeding £1,000, based on the worth of the cryptocurrency that was mined (measured in GBP); nonetheless, mining expenses may be deducted. This includes your computer, power, accounting, and so on—but only if you treat bitcoin trading as a legitimate business rather than a pastime.
When you sell cryptocurrency for more than £3000, you have to pay Capital Gains Tax if you earn a profit (for example, via an exchange). Should you incur a loss, it may be carried over and claimed the following year.
- Mined bitcoin may be deducted from your income as a cost.
- Cryptocurrency you sold; you’ll record a profit
How can I pay my bitcoin taxes? #
It’s quite easy. You have just finished filing your self-assessment taxes. Capital Gains Tax is the most prevalent tax paid by cryptocurrency investors. To see out what you would owe on the gains from your investments, use our calculator.
