CGT

jsh63

If you use an exchange they will report to HMRC (also possibly you bank will also). HMRC may contact you to "remind" you to report your capital gain. I sold 0.34 BTC in Dec 2024 and this happened to me. I have just the paid £6k CGT at the end of Jan based on a cost base of £14K and a sell price of £75K. HMRC have a department now that tracks crypto transactions in New Bailey St, Salford

crunchyeyeball

Yup, just using bitcoin for purchases counts as a "disposal" for tax purposes. However, in the UK the first £3K of capital gains are exempt from CGT, and you don't typically need to file a tax return for gains under this threshold. It's still annoying since it means you typically can't use bitcoin for *everything* without incurring CGT (assuming you *have* a gain), but as long as you keep annual realised gains under £3K there should be no tax implications.

Kie_ra

Look at it this way; You have no fiat to pay X. You really need X. You have three options: * Take an expensive, high interest loan from the bank. * Sell BTC and trigger CGT. * Use BTC as collateral to get access to significantly cheaper fiat. What sounds like the best option?

Forsaken-Welcome-709

The goal is NOT to make money ( fiat cash garbage ;) ). Many of us go through a "what even is Bitcoin" phase, and it forces us to ask and answer hard questions about "what even is money". Once you get through that, you change your frame of reference. Cash is not money, Bitcoin is money. Cash is just what everyone out there wants to use as money. And wall street is willing to even lend this cash thing to us so we can use that instead of buying this cash thing. What's the benefit of that? Well asset appreciation. But it isn't appreciation to us, its just stepping away from the massive constant debasement of what everyone else is calling money. So sure, you will give me a loan so I can use this "cash", and then ask for the money back later on after it has been debased to hell? What a deal, what a steal! The trick of course is that there are many variables to consider. APR, time, liquidation levels, and Bitcoin's perceived and traded volatility in the market. These things, that the finance industry uses as the basis of their rules when lending to you, affect your ability to safely borrow. So we have to over compensate. This is why it isn't the right thing for EVERYONE to do, but for many it is beneficial. The TLDR; is that if the CAGR (compound annual growth rate) of Bitcoin is higher than the APR of the loan, then by the time you have to pay off the loan, you end up selling less of your bitcoin for the amount that you borrowed. But even better, you can borrow more and roll over the loan. Well now we are starting to see the benefits of that "compound" word. The loan compounds, but the CAGR does too, and since it is higher than the APR, it compounds faster than the APR. Then there's the volatility of Bitcoin: CAGR is a smooth straight line, Bitcoin doesn't trade like that, so there needs to be a lot of precautions taken. People recommend keeping below 15% LTV (loan to value) when you take out your loan(s) at all times. This way it should theoretically survive any bear market, even if Bitcoin crashed 80%, you wouldn't be forced to liquidate and settle the loan, so you can continue to let TIME do its thing. Over time, you debt grows into tens, hundreds of thousands, or a million or more, but.... percentage wise, it goes down. Your LTV goes from 15% to 10% to 5% to 1%. That means when you finally decide to pack it up, you sell 0.01 BTC instead of 0.15 BTC. The other important reason is that governments demand CAPITAL GAINS TAXES. If you sell your bitcoin now, you pay the market value, and you pay high taxes on top of that. If you do it after you retire, you pay less taxes potentially because you don't earn a salary anymore, plus the value grew higher, so Bitcoin right now is for many, a savings play, not a make a quick buck play. In the future, if the climate changes and governments decide that Bitcoin is money and that it shouldn't be subject to capital gains taxes, then even better! Time is on our side, even if CGT goes up, it is very likely that the value of the asset appreciated enough that we still made out the winner. CGT applies whether you buy paper money, or buy a house or buy a wedding, whatever. Anyway, all the while, you just keep stacking and keeping money to yourself until everyone else catches up and starts to ask for your bitcoin money instead of the toilet paper. Now, even with all that I have said, playing with loans is still dangerous, still feels like gambling, and so people like myself just stack and/or hodl, and don't over invest so that we can live off our salaries and keep that bitcoin for emergencies or retirement, or for some big expense that we were saving for... like a wedding, or a house or something we need in the future that we otherwise couldn't have afforded. I think of those who take loans, half of them will do magnitudes better than us, and half of them will get rekt because it takes much more discipline to manage loans like this without getting into trouble and undoing all your hard work in a moment.

crunchyeyeball

For now I still need to pay my bills and buy my groceries with fiat, plus my country imposes Capital Gains Tax on any gains over a certain threshold. Therefore I treat bitcoin as long term savings. I'll keep accumulating and only cash out as little as possible if/when needed, keeping tax to a minimum. If the rules change to e.g. eliminate/reduce CGT on bitcoin, or dramatically raise the exemption threshold, I'll react accordingly and move as much as possible out of fiat.

devilkin

You can buy gift cards online for crypto. But the exchange rate tends to be pretty shitty. But better than the amount of CGT. Other than that, you'd need to open a bank account with a foreign country that allows it, and that doesn't report taxes to Australia, and that had not CGT for crypto.

eenthebean

Didn't account for CGT in this. Do you think it's worth on purchases worth less than or around 100 dollars annually? I can't imagine the tax bill would be incredibly high but I'm moreso thinking about the complications to filing.

crunchyeyeball

Probably depends on the tax rules in your country. I think most of us want wider adoption, but in my country I have to report any disposal which results in a gain over a certain amount (CGT). Therefore, although I use it for *occasional* purchases, I don't use it as the *default* option, though I probably would if tax wasn't an issue. I'd suggest getting a hardware wallet. Ideally one of the options listed in the [Getting Started](https://bitcoin.org/en/getting-started) link here or the [FAQ](https://www.reddit.com/r/BitcoinBeginners/comments/g42ijd/faq_for_beginners/) over on /r/BitcoinBeginners You can then buy some bitcoin at a reputable exchange (same links), transfer to your wallet, and learn the rest as you go.

andys811

What country is this? In UK where I'm from, you pay CGT on the profit each time you make a disposal, disposal counts whether it's from BTC to USDC, BTC to ETH, BTC to GBP, it doesn't matter it all counts

eiretaco

Switzerland is an outlier. Most European countries have CGT. There may or may not be 1 or 2 more in Europe, I am unaware of any others however as it's not typical. Here in Ireland it's 33.5% for CGT and we have a deemed disposal tax as well. The only asset that escapes this really is property, providing it's your main residence and you lived in it for at least 6 months before sale, then it's tax free. Oh, and lottery/gambling winnings are tax-free. Everything else though is taxed to the hilt.

oh_danger_here

not sure where you are based, but CGT-related losses can be offset against annual tax credits. As for CGT's it's not a tax on risk, it's a tax on the difference between what you price you paid for an asset and what price you disposed of it for. It can go both ways..

Brilliant_Pound1304

CGT is such a ridiculous concept. Your investment goes down? Tough luck. Goes up? Government wants their share

Blade_Runner_69

Not if you use peer to peer, defi and only spend within your CGT allowance. Sounds like you have a skill issue!

Other_Importance249

So does that mean you didn't make any gains, you live in a jurisdiction where they don't have capital gains tax, or you just didn't think about CGT?

saltyru

I guess the Dutch government isn’t bothered about euthanising the very system of wealth generation that the country brought into the world four centuries ago? Catastrophically poor decision that makes the British government’s own brainlessness in raising the base CGT rate from 10 to 18 percent last year look like a work of genius in comparison.

TheMuel7

Take into account the CGT that Australia applies to crypto.

crunchyeyeball

I basically just use premium bonds as a convenient tax-free place to store funds while waiting for the ISA limit to reset. Sure, the effective interest rate isn't great, but any winnings are exempt from tax, and every month I get a little thrill when I check for prizes. The main reason is that I *hate* paperwork, so I'd rather avoid the hassle of filing a tax return if I can avoid it. Unfortunately we have precious few tax-free options open to us - ISA, premium bonds, SIPP? (exempt from CGT, but not income tax as I recall, plus no easy access). All the other obvious options (savings account, GIA, etc.) would be subject to either CGT or income tax (or both), at least above some threshold.

crunchyeyeball

If diversification is important, bitcoin ought to play a role, but it needs to be long term. I'd suggest 4 years minimum, but preferably a lot longer. I was recently made redundant, but when I had a steady paycheck, my plan was: * Every payday I'd set aside £2K per month which went straight into premium bonds (tax-free) * Every April I'd withdraw £20K from PBs to max out my S&S ISA (also mainly all-world funds) * No SIPP, but a certain % of my paycheck went into my workplace pension * Spare cash at the end of each month went into bitcoin, with buys spread out over the month to make bigger buys during dips As it turned out, bitcoin outperformed both the ISA and pension, even after accounting for CGT, so it now forms the majority of my investments (even after the recent dip). I'd suggest checking the rules for holding bitcoin ETNs in an ISA too. They were recently changed so although we can now hold the ETNs in a S&S ISA, it's only allowed for a limited period before it needs to be moved to an "innovative finance" ISA instead, which seems a little pointless.

spatchi14

Same in Australia, even with the CGT discount.

Berg_turdler

I would have considered 10BTC at the last ATH very much FU money. Sell it all, pay your CGT, invest it and return 8% annual on it, earn twice equivalent of the Australian median income without having to every lift a finger. No one can make you do anything.

Starkey18

I believe the vast majority of crypto is bought and sold within countries with CGT hence the post

rgnet1

Put $100k of btc at risk to have $10k to spend? I think I’d rather sell $14k, pay the CGT, have the same result and $86k of btc secure in my wallet.

Kie_ra

Sell all the garbage and use the loss to offset the CGT

Froz3n_Cornchip

Not sure where you’re from but yeah you pay CGT but that still doesn’t eat all your profit. Otherwise no one would invest in anything. You’re not wrong about timing and holding though.

Kie_ra

How do you deal with tax? Surely this can't work? if I touched my stack, I'd be paying CGT so massive that it makes absolutely no sense to even attempt this, not to mention the risk of timing it wrong Still convinced just holding is better 

Unusual-Piece-93

OP is clueless. Thinks he’s walking away with 26% profit later this year. By his calculations dollar will have lost 10% during the year. He’s still needs to pay CGT and exchange fees. I couldn’t be bothered doing calculations, but maybe he is $2000 up if his predictions come true and he sells this year. Good chance he gets it wrong and sells for a loss or waits much longer. Like others have said, if you need money back this year, don’t buy.

Short-Shopping3197

About 50% in a world index tracker ETF, 25% split between gold and Bitcoin, and 25% in a zero-risk national bond scheme as my emergency fund. In the UK the ETF, gold and bonds are all tax free, I’ll start drawing the BTC out from age 50 at my annual tax free CGT allowance.

Resident-Quality1513

You can cash in £3000 and not pay CGT (and not have to think about how much your gain is!) every year. As soon as your accumulated BTC starts putting on more than £3k/year that's the end. You have a passive income of £3k/year. Thanks very much HMRC. I would rather it was a bit more than that, but that's where we are.

GuildfordAI

Don't mess around and just use something like Summ to calculate the taxes due as it gets really complicated (for example making a BTC->BTC transfer between your wallets is not a taxable event, but the MINING FEE you pay may be subject to CGT if you held it for a long time). It obviously gets even more complicated if you're using an exchange that uses USD/EUR or other forex as that's another CGT start/end event to determine when withdrawing. Feel free to use my ref code so we both earn some dosh, [https://summ.com/?via=b0haquqv](https://summ.com/?via=b0haquqv) or just go to their site directly if you don't want the referral [https://summ.com](https://summ.com) I haven't tried the other tax systems but heard Koinly is good too.

dave5526

There is some bad advice on this thread. Capital Gains applies to investing, not trading. Trading falls under income tax. If you are buying and selling tokens over short periods for profit, and try to claim these are investments and only subject to CGT, HMRC will take a dim view of that if they ever look at it. How likely they are to pay attention is difficult to say, but with increased use of AI by HMRC to analyse submissions, I would not want to risk it. Also - it's almost certainly not worth it. Very few people manage to day trade successfully. Almost all who try would have been better off (financially and mentally) just investing that money in an Index fund, gold, BTC etc over a long period.

crunchyeyeball

That's not really how it works, at least not in the UK. Any sale of bitcoin counts as a *disposal*, and may be subject to CGT if the capital gain exceeds £3K: https://www.gov.uk/guidance/check-if-you-need-to-pay-tax-when-you-sell-cryptoassets#when-you-need-to-pay

crunchyeyeball

Depends on the total gain. In the UK, the first £3,000 of gains are tax-free. Any gains above that are subject to CGT (Capital Gains Tax). Only exceptions are ETNs held within an ISA.

-5H4Z4M-

This doesn't work in UK. Selling crypto into fiat triggers a Capital Gains Tax (CGT).

Any_Ice1084

unless youre running it like a business HMRC usually treats trading as CGT. staking and rewards are income tho, thats where ppl get tripped up

Big-Finding2976

Airdrops aren't necessarily subject to income tax. Stuff you receive in exchange for doing something, like staking or lending your assets, is treated as income but if you receive an unearned airdrop you can record it as a gift with a 0 cost basis and then just pay CGT on any gains when you sell it.

Threemonkeys123

Centralisation has already occurred in some ways (regulations, CRAF, CGT) but if you don’t sell you don’t lose. I plan on waiting until it will fund my retirement goals (20 years+ yet) and then I’ll cash it all out and emigrate to a tax haven, while I’m at it I’ll mace all my CC’s too! Hehe

parkway_parkway

From your comments is this what happened? You buy some coins for say 10k. They rise to 68k in the 24/25 year and then you swap those coins for some dog coin creating a CGT event. That means you have gains of 58k and a bill of 18% of that (if you're a lower rate tax payer). Then the dog coin crashes in value to 10k and you sell it in the 25/26 year creating a 58k loss for that year? Is that basically what happened? You definitely did a trade in 24/25 that realised the gain? As unfortunately I don't think you can carry the loss back. One option is to write a letter to HMRC and explain what happened and explain that the money is lost and you want to offset the loss backwards. They are most likely to say no, but the potential of saving 10k is worth it. You can carry the 58k loss forwards with you and offset it against future gains which is at least something.

Reception_Available

same shit, i still have to pay even with that shit low CGT of 3000 .

Amber_Sam

I don't have to pay CGT from bitcoin, yet still prefer to buy bitcoin without KYC.

Leithm

Did this happen before or after October the 30th 2024 which was budget day. Doesn't normally matter but they changed the CGT rate. Also you rate will depend on whether you are a higher or basic rate tax payer. If you are a basicc rate taxpayer and it was before October the 20th your CCGT rate might only be 10%.

FatFettle

So you can't carry back capital losses, meaning this year's position is moot. One method I know of to negate (by deferring it) a previous CGT liability is to use an Enterprise investment scheme (EIS), but that's something of an esoteric investment Effectively you invest the tax bill instead of paying the tax man, however if you ever sell the investment the gain is then realised in that tax year (with the option to defer it again). Obviously this isn't advice and may be totally unsuitable for you.

Reception_Available

Yes, 10.500 with that CGT 3000 already excluded.

FatFettle

That's subject to CGT, not income tax mate. I'm probably being a bit pedantic but it's important to be specific in tax matters. I take it your gains exceeded £3k for the tax year in question?

FatFettle

How did you create an income tax liability? I'm assuming you were staking cryptocurrencies. Losses will presumably be capital losses, subject to CGT so different tax treatment.

ObligationSea2667

late to this - but this achieves nothing if you either sell or swap another coin to tether in < 12 months and hold tether for 12 months. The second you swap to tether or sell whatever crypto you sold -> immediately taxable and no 50% CGT discount can be applied

Threemonkeys123

I wasn’t aware this could be done except through a mixing service (which carries its own risks - flagged up by exchanges, chance of loss, being classed as disposal triggering CGT etc) If anyone knows how to combine the UTXOs please let me know 🙏

Hit4Help

And even if you establish residency elsewhere you may still be liable for the CGT on the assets held while aquired in the home country. For example I couldn't leave the UK and go to tax haven to cash out any currently held funds. The UK would still wants it cut of 18%

alexkey

You do trigger a cgt event even in us, but if you sell your USDC for USD and to US bank account, the tax on that would be 0 since no gains. FYI Australia uses AUD, not USD, and exchange rate to USD is not fixed, so you do trigger CGT event and it will be either gain or loss depending on where the exchange rate goes. And any legitimate exchange reports transactions to ATO if you link it to AU bank account (or otherwise mark Australia as your place of residence).

alexkey

USDC has no special status. It is a cryptocurrency and therefore its disposal (changing to fiat) is a CGT event. You can easily google that yourself on ATO website.

Unusual-Piece-93

Re-read the ops question. They have just started buying bitcoin (newbie). Good idea to mine? **No** Better to just buy bitcoin with the money? **Yes** I was a newbie when I bought the miners 6 months ago, I am still learning. Whilst tax can make the equation better by claiming costs with KYC, CGT becomes worse (no discount for 12+ months held on mined BTC, at least in Aust). If you’re not KYC, you can’t claim electricity and machine depreciation against the cost of the BTC mined. CGT cost base would be zero if you ever try to sell for fiat on a KYC exchange. **The OPs question was surely about most cost effective**. In 4 months, my rewards reduced by 23% and getting sats that the miners cost back looked unlikely. Add to that the electricity cost and I would be well underwater. Rewards advertised are NOT guaranteed, they are more likely to go down every month. So I sold the miners and will DCA what I would have paid in Electricity. I was mining on a hosted platform to a mining pool and therefore not running a node. An efficient miner requires 3 phase power which most people don’t have at home. Consider repair costs and downtime not hashing. Look at the global hashrate always going up, rewards going down; except in a dip when mining for fiat becomes unprofitable as it’s cheaper to buy the sats on an exchange. Cost of miners has also gone down with BTC price, meaning I lost money on the miners. Once the halving happens, there will be more efficient ASICs available so the ones you bought now will be scrap metal in 28 months. Not profitable to mine with and cannot be used for anything more than an ugly door stop. If you want more sats, buy on exchange. If still interested in mining and securing the network, buy a lottery miner and run a node. IMO, the only way you make money from mining is if BTC hits new ATH, but you would still likely have more sats if you had spent the miner cost and electricity costs buying sats on exchange. Just my 2c worth from my experience.

Amber_Sam

>With BTC spending having to pay capital gains taxes, I'd hate to be your tax advisor. Who said I have to pay CGT? There are exceptions, countries with zero CGT out there. >Not to mention, every exchange operated in the US... It might surprise you but about **95% of the global population is living outside of the US**.

Rude_Adeptness_8772

CGT :(

crunchyeyeball

This is really something you need to talk to an accountant or the tax adviser about. I'm assuming you're just looking at CGT (Capital Gains Tax). The price in 2012/13 varied a lot, from ~£4 to ~£800, but in any case it would have been a tiny fraction of it's current value. As I understand it, if you can't (or prefer not to) provide proof of purchase, you could either just *estimate* its value when you received it based on the date & historic price data (& hope HMRC accepts that), or just use a *zero* cost basis. If you use a zero cost basis instead of the accurate price, you'll pay a little more tax, but the difference will be dwarfed by the gain (& therefore the CGT) anyway.

Professional-Bend-69

Do you think zero CGT is realistically where we’re headed?

Fancy-Snow7

In my country it's even more complicated. We are either taxed at CGT rates (17% of gains) or your marginal tax rate (up to 45%) depending on how long you held their bitcoin (3+ years for CGT normally). Keeping track of how long you hold each bitcoin if you buy monthly is a nightmare.

uniqueheadshape

We should be using Bitcoin as payment. Otherwise Bitcoin loses. Stack for savings. Stack for spending on Lightning. Keep a simple spreadsheet if your country sucks ass around CGT.

jandaba7

It's not theft but it is terrible tax policy, CGT on retail investment (crypto or otherwise) makes the country and everyone in it poorer.

Elendron

Reeling?! I'm over the flipping moon that Reeves didn't raise CGT again. I struggled to drop off the night before. I watched the whole budget with a thumping heart. As soon as the tax reform section was over I knew we were good. I was and still am so relieved. Bring on the the gains baby <3

VeryThicknLong

CGT has been pretty flexible over the course of my lifetime.

Kenbarlow78

This. CGT in Ireland is 33%. Not worth the stress. I’m just gonna keep accumulating till Btc gets to 1mil, nd then I’m done. All profit goin to my ETFs after that/im gonna go sit on a beach in Portugal for the rest of my life 🍹🏖️

slvbtc

Capital gains tax should be illegal. Most of an assets gain is just a function of the devaluation of the currency meaning CGT is taking something from you just for owning it when there was zero net gain. Do they subtract the inflation rate from your appreciation rate before taxing you? Nope. CGT is the most vile tax in existence.

justincharles78

Agreed but it depends on how confident you are to time the market. Take 20% loss straight away on your profits due to CGT. Now you need a bigger move to make that back.

The-maulted-One

Don’t forget your CGT, that should account for about 30% of it. Nice trades but if you buy back in all your doing is lowering your cost of entry.

Interesting_Loss_907

Only short v long term (> 1 year), and also based on income, but still, your point is correct. We pay 20% CGT on *long* term gains to the federal gov’t, then on top of that 20% most states charge CGT also. So where I live, I have to pay 30% capital gains tax *even if I held the asset long term*. And that’s after I paid > 40% in taxes on my income (fed+state+ss). It’s sickening.

cooltone

UK: It is and is subject to CGT rules.

ChrisWitcherOfWealth

hmmm Soooo The merchant deals with the CGT instead? Rather than the user? The user still has to hold usd?

ArugulaPotential366

Totally agree. I went down a whole borrow against rabbit whole and got a severe headache. Just sell what you need either monthly, quarterly, or annually and pay the damn CGT

lechuckswrinklybutt

That is not how CGT works. If you sell 10k worth of BTC in a place where CGT is 30%, you wouldn’t pay 3k in taxes (unless your cost basis was close to zero, which is unlikely). It’s in the name. You only pay tax on the gains. To keep it simple, let’s say you put 5k into BTC all at once, the price of BTC doubles, and then you sold it all in one go. Your gains are 5k so you pay 30% of that.

Threemonkeys123

Build as big a stack as possible, retire, draw any private pensions, max out all cards/loans, cash the bitcoin in and skip the country for a tax haven like Bulgaria or Czech and dodge the CGT 👍 That is, if you have a big enough stack by retirement, otherwise only draw £3000 per year (to avoid CGT) to supplement any other income. Thats my plan 👌

Amber_Sam

Buy bitcoin the same day, no gains, no CGT.

Kie_ra

Let's say hypothetically it reaches 10m. Why not take out BTC backed loan of say $1m Use some of the $1m to make repayments, use the rest for whatever floats your boat.  Take out another loan. Repay the previous loan.  Rinse and repeat.  Surely paying measly 9% interest on BTC loans beats paying massive CGT on sale. 

HedgehogGlad9505

I wonder why there's no wallet that automatically calculate CGT? Technically it's easy, you input your cost when loading the wallet, and every time you spend, it fetches real time price and do simple math. Or does CGT in US doesn't work that way?

crunchyeyeball

Diversification is fine. Diversification into the 26+ million "alts" is just gambling. The bulk of my savings are BTC, but I do hold some stocks, bonds, & gold, especially where there are tax benefits. If I find myself in need of quick cash, I don't want to be forced to sell bitcoin at a bad time, and possibly incur a large CGT bill.

Icy-Soup-7071

IMO Bitcoin isn't an ideal currency... A certain amount of inflation is necessary just from a distribution standard... Bitcoin is Hyper-deflationary because it can be lost and never recovered. This cripples a debt based society... You would have to move to a completely debt free society but then progress is massively stifled as you need to save in order to grow... Which ethically makes sense. Bitcoin is more of a symbol/representation for sounder money. I've always stood on the thought of equivalising CGT/Dividends and Trust taxes in-line with income taxes (I'm from the UK so my ideas are largely biased towards solutions for our tax system) if not extremely high above certain numbers and possibly even a wealth tax. COMBINED WITH. Radical idea but a currency burn to stabilize inflation. I mean a LITERAL BURN. Take the money off the 1% and literally burn it, its the only way a high tax on the top 1% wont result in consumer purchasing power decreasing. Ultimately any attempt to equivalise wealth and income distribution just leads to the working and middle class suffering... Unless you simultaneously improve their purchasing power. Stable currency whilst the rest of the world continues to inflate results in more foreign investment and cheaper consumer supply and trade. Its not fully thought out yet and I'm still playing with the thought perspective would love some discourse on this.

Kupo_Master

That’s exactly the point. Untraceable bitcoin will not be accepted by “licensed” exchanges. Remember the law will require you to declare all your bitcoin holdings; any undeclared holding will be automatically not easy to trade. Your untraceable will be converted into fiat but it will be illegitimate funds. Exactly the same as people who hold money off shore without declaring to avoid CGT or other taxes.

Hit4Help

If they are doing that then they can't also charge CGT ontop if needed to sell coin to cover the 1%

crunchyeyeball

May be tricky to manage capital gains tax if you need to file a return, since any spending of BTC will count as a disposal for tax purposes. Most of us will have a personal tax free allowance of £3K, so any annual spend covering gains above that will need to be filed in a tax return. If you spend enough to cross that threshold, or if you file a tax return for another reason (e.g. self-employed), you'll need to keep track of and report all those transactions, and pay CGT on any gains over £3K. Could get messy.

Kie_ra

Stacking is smart, what you're suggesting is downright retarded. I suggest you learn about CGT, utilising loans, and some principles of FIRE. Good on you for not having kids - your first investment should be a vasectomy.

DalehubCrypto

I call it making profit with a 50% CGT discount.

ColtAzayaka

Maybe someone can correct and clarify if I’m missing something here, but I see no reason why you couldn’t use your BTC holdings as collateral to secure a loan. Depending on the terms of the loan it might be more convenient and/or cheaper than directly purchasing fiat currency with BTC and later paying more fees to repurchase the BTC. Selling BTC for fiat is likely also tax-inefficient due to CGT. A loan also mitigates repricing risk, which might be worth considering given BTC’s volatility, but unless you need the money for a significant length of time that probably doesn't matter too much. You’re right, though. A lot of people talk about the current value of their investments as if it were realised profit rather than an open position.

Swimming_Sign_888

Because you can borrow against it if you need cash. Plus you wont activate CGT by doing that. Go and read a few books about money before coming here with your fucked up questions

Aussiehash

Keep in mind that Governments are constantly trying to spend more and to tax more, the recent superannuation legislation being an example, and the treat of taxing unrealised capital gains. There is also discussion about changing stamp duty and abolishing negative gearing and the CGT discount.

cosmicchitony

For specific tax calculations in Australia, you should consult with a qualified accountant who specializes in cryptocurrency, as your personal income and the timing of sales will drastically impact your liability. There are accountants out there who will give free consultations if you ask. Anyways a common strategy is to sell portions in different financial years to utilize the 50% CGT discount and potentially avoid pushing yourself into a higher tax bracket.

PTRBRIG

Bloody hell - so we're taxed twice? CGT, then the remaining is added to income tax, thus possibly increasing our tax bracket? So tim guessing the play would be to: 1) Avoid full CGT by waiting 1 year + 2) Only sell an amount per year that would put you slightly below the next bracket to avoid additional income tax? Thanks

Last_Explanation9105

CGT differs from income taxes in the context of any capital losses you may have (which you can not offset the income tax). So, you subtract capital losses from CGT, then apply 50% discount. From the tax brackets perspective, income and capital gains are in the same bucket (after CGT discounts, the remaining gains are added to your taxable income and taxed based on your total income tax rate).

PTRBRIG

Thanks for the reply, so I'm a touch confused because you said it doesn't apply to income tax but then said sell slowly to stay in a lower bracket? Can you pls explain that again for me? So if i stop all my DCA for a year (to make the recent deposits 50% CGT) Then I should probably start to DCA out? Small withdrawals? How would you go about it? Excuse my ignorance haha Thanks for the insight.

Last_Explanation9105

For ATO, BTC is an asset, and CGT applies, not income tax. Each buy has its own 12-month clock for the 50% CGT discount. So, use FIFO and sell slowly to stay in a lower bracket. Keep all the records (ATO gets a copy of the exchange data). Starter options can include borrowing, using BTC as a collateral, using non-KYC, SMSF, immigration, etc.

Head-End-5909

In the US, any sell/swap resulting in profit is a taxable event. The profit has been realized whether or not it’s moved to your bank as fiat. On top of that, you have to report your crypto holdings on tax forms each year. Here’s what a 1 minute search on the Internet yielded about the UK: ———— No, in the UK, leaving the fiat proceeds from a cryptocurrency sale on an exchange does not prevent it from being a taxable event. According to HMRC rules, selling crypto for fiat currency (like GBP) constitutes a “disposal” and triggers Capital Gains Tax (CGT) on any profit at the point of the sale itself, regardless of whether you withdraw the funds to your bank account or leave them on the platform.   The gain is considered realized upon disposal, based on the fair market value at that moment minus your allowable costs (e.g., acquisition price plus fees), and it’s aggregated with other gains for the tax year. This aligns with broader HMRC guidance treating crypto as capital assets, where the tax liability arises from the transaction, not from cashing out to traditional banking. For the 2024-2025 tax year, you’d need to report this via Self Assessment if your total gains exceed the £3,000 CGT allowance, with rates at 18% for basic-rate taxpayers or 24% for higher/additional-rate ones (up from prior years due to 2024 budget changes). Keep detailed records of each trade, as exchanges’ reports alone aren’t sufficient for HMRC compliance. If the sale involves crypto-to-crypto trades (e.g., BTC to stablecoin before fiat), each step could be a separate disposal, compounding the tax events—something worth double-checking in your scenario.  If your activities resemble trading rather than investing, HMRC might reclassify profits as income taxable at up to 45%, but that’s assessed case-by-case based on frequency and intent.

fairyflossmagpie

Plus CGT.

OkSeries5363

I'm not saying they get doubled taxed? I was the one who originally informed OP of the DTA with Portugal. The fact that a complex legal treaty is required to prevent double taxation proves that both the US and Sweden have a legal claim to tax the same income. If the US didn't tax its citizens abroad, the treaty wouldn't be necessary! Think of like this, the US citizenship based tax is the full price on the item. The DTA is a coupon that might reduce what you owe at the register, sometimes even to zero. But you absolutely still have to go to the checkout counter and show them the coupon, file your taxes. You can't just walk out of the store because you have a coupon in your pocket.  This is critical for capital gains. If US citizen lives in Portugal. If Portugals tax on a specific capital gain is 0% the US coupon ie the foreign tax credit is worth $0. The citizen will then owe the full US capital gains tax to the IRS.  Not living in the US for 6 months doesn't mean your US taxes go away or the obligation report. The treaty prevents paying tax twice on the same dollar but it does not prevent the US from taxing a dollar that the other country chose not to. Just to be clear the only real escape from US tax obligations is to renounce or relinquish your citizenship. But don't think of it as a simple tax dodge, the US can hit you with a large expatriation tax on the way out. For CGT it forces a deemed disposal which means paying all your unrealised capital gains on your global investments.

normnormno

If I sold at 126 and bought back at 105 I'd have 28% CGT to pay on it. Don't see the point.

JamesTiberious

Too wishy washy - If I’m going to taxed CGT on actual bitcoin without any protections/at my own risk, then I expect to be protected for an ETN within an ISA.

quazatron48k

It’s called day trading and be careful you can cover any CGT you might be amassing.

Satoshiman256

ISA is no CGT

SpareDesigner1

Gold and silver are my BTC. I can’t get direct exposure to BTC ETFs in a UK ISA, and I don’t want to be paying CGT if I don’t have to.

crunchyeyeball

If you're in the UK, you might also be aware that in a few days we're finally getting access to something akin to the bitcoin ETFs, which ought to be available within a tax-advantaged wrapper like an ISA, bypassing CGT: https://moneyweek.com/investments/bitcoin-crypto/which-platforms-offer-crypto-etns Much as I generally prefer self-custody, the thought of holding some in a tax-exempt wrapper too is awfully appealing. Just something to consider.

DaVirus

The only thing that would help a bit is flipping your cold storage to SIPP to use the CGT allowance when you get close to retirement.

normnormno

How about because everyone has the chance to build wealth and escape the rat race when CGT is lower, not just the already wealthy. Better question; Why would you want to abolish something just because it benefits someone else more than you?

Qu1nt3n

I don't. I would be in favour of CGT if it meant a significantly lower tax on labour, but guess what.. ;)

Haagen76

For 10% CGT !? That's really low.