If someone sells half of their Bitcoin investment

[A.Jenery]

Someone buys or has produced £4200 worth of Bitcoin and it doubles in value in a short while.
Half of it is sold to protect the initial investment and the other half is left in Bitcoin to see what happens:
Is tax liable for the £4200.00 they took out because it's considered profit? Or is it not considered profit because it's the same amount they initially invested?

[a.flynn]

I'm no expert, but buying or producing bitcoin (which isn't cheap in term of hardware investment or running costs) would I think be considered an investment, but you may be liable for tax on the half that you sell if your total profits so far is more than £12,500 which is the tax threshold for 20/21 for self-employed people. 

[McGaskil]

I'm no expert, but buying or producing bitcoin (which isn't cheap in term of hardware investment or running costs) would I think be considered an investment, but you may be liable for tax on the half that you sell if your total profits so far is more than £12,500 which is the tax threshold for 20/21 for self-employed people. 

Strictly speaking not more than £12500 net profit, I think, so after expenses, etc.  Before it's gross profit so turnover.  You're taxed on net profit...

[blag-it Admin]

Interesting topic and point raised by OP!  

The initial £4200 is an investment/expense.  The second £4200 generated from sales is gross profit.  What's left after expenses is net profit therefore maybe liable to tax if total net profit for 20/21 is more than £12500.  I think that's about it.


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