Author Topic: If someone sells half of their Bitcoin investment  (Read 1665 times)

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If someone sells half of their Bitcoin investment

« on: 11 February, 2021, 09:28:00 PM »
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A.Jenery

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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?

Re: If someone sells half of their Bitcoin investment

« Reply #1 on: 12 February, 2021, 06:30:16 PM »
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a.flynn

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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. 

Re: If someone sells half of their Bitcoin investment

« Reply #2 on: 13 February, 2021, 10:56:31 AM »
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McGaskil

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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...

Re: If someone sells half of their Bitcoin investment

« Reply #3 on: 13 February, 2021, 11:15:20 AM »
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blag-it Admin

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Interesting topic and point raised by OP! 8)  

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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Re: If someone sells half of their Bitcoin investment

« Reply #4 on: 06 May, 2021, 09:51:58 AM »
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LISTR-93

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Interesting topic and point raised by OP! 8) 

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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This is about right according to UK tax info I looked at while reading this.  Less than 12,500 there's no tax, but more than this and you might have to pay on the net profit, not sure though.

Re: If someone sells half of their Bitcoin investment

« Reply #5 on: 21 May, 2021, 11:31:26 AM »
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McGaskil

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You will also e liable for N.Insurance if your net income is more than 12,500

Re: If someone sells half of their Bitcoin investment

« Reply #6 on: 19 June, 2021, 12:27:05 PM »
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A.Jenery

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Thanks everyone for the great pointers!  So as I understand it from what's been said, if it doubles in value to £8400 tax is only paid on the second £4200 if my total net profit is not more than £12500?  I think I get that, but what if the second £4200 pushes the total net profit to over £12500?  Would tax be liable on the whole £4200?