Rise and Rise of digital currency
Updated: Jul 13, 2021
For those not familiar with cryptocurrency, lets start by asking where have you been? Its been headlining in the media consistently over the last year or so and is the dawn of a new financial era of digital currency markets. Bitcoin kickstarted this revolution back in 2009 when each virtual currency was worth zero (yes no value at all) but reached an all time high in May 2021 when each Bitcoin held was valued at £42K!
Clearly something happened for such a surge in value and this in simple terms is attributed to companies adopting it as a form of payment to buy goods or services. Tesla became once of the first major companies to accept Bitcoin alone as payment to buy its cars. This meant Bitcoin was no longer just a virtual currency it could not be used to buy real world items, a game changer for the crypto world and popularity and value soared.
With such high valuations assigned to 1 x bitcoin several investors cashed in their fortunes, and now authorities have also taken notice too with HMRC here in the UK requesting data from exchanges like COINBASE on UK individuals with invested interests in Crypto.
As a result we have seen rising number of calls from clients worried about possible tax investigations and impact to them taxes payable on profits made. A simple test to determine if you will be affected is to calculate how much profit you earned within a tax year (April to March) from buying and selling Crypto and if this exceeds the personal allowance (Roughly £12500 over the last tax years) then it needs disclosure on a tax return. Clearly this does not take into account other income streams eg salary, dividends, pension, rental income etc