Martin Lewis has waded into the complications and exemptions around cryptocurrency over income and capital gains tax. The money guru has revealed that HMRC doesn't view the digital phenomenon as a currency, which could see traders getting caught out if they aren’t aware of their tax responsibilities.
One such situation is cryptocurrency as one listener sought their advice, asking: “I’m a basic rate taxpayer earning £25K a year. I bought cryptocurrency for £10K and I’m going to sell it for £500K.
The Money Saving Expert reiterated to help drive the point home to listeners: "So if you’ve bought and sold it, it’s Capital Gains Tax but if you’ve created it, that’s what mining is, then it’s seen as an income because you’ve created it as a form of work.” Rebecca added with regards to Capital Gains Tax: “There’s no allowance for inflation, how long you’ve held it. So most of that gain is going to be taxed at 20%, almost all of it.