The amazing story of bitcoin in 2017 turned it from something unnatural and unknown into a very powerful financial instrument that is used by governments all over the world. The United Kingdom sees the potential of the cryptocurrency and wants to help those, who use it. According to the tax law of the United Kingdom, rank gambling gains are untaxed. It sounds too good to be true, does not it? However, it is how it is and it may be the reality.
Everything starts with a statement of a spokesperson from HMRC – Her Majesty’s Revenue and Customs. It was announced that government do not tax bet gambling, since it is not trading income. It may seem as something perfect for people who are into cryptocurrencies, but the spokesperson paid special attention to another fact. He stated that there are certain circumstances and factors, like the skills degree or organization that is able to make that kind of activity taxable, since government will consider it as trading income. Therefore, each case requires special investigation and there are many factors to take into consideration. The situation remains unclear and many experts started paying attention to the statement of the HMRC spokesperson.
Katie Morley, the consumer affairs editor claimed that the statement from HMRC seems to be a “tax loophole” and that is able to make Bitcoin investors’ lose all gains. Katie Morley also added that it can be even exploited by those, who filling in their returns for the current tax year. As a result, HMRC can spend millions of pounds. It is believed that after gains of bitcoin in 2017, governments will increase their incomes. Over recent years, governments missed many opportunities that were able to fatten their coffers greatly. Governments just did not know how to take those technologies and how to work with them. However, price increasing of cryptocurrencies changed everything (at a certain point, bitcoin price was about $20,000) and now governments consider digital technologies as a capital gain.
Nevertheless, according to British laws, gambling is untaxed and that is right what cryptocurrency enthusiasts may use.
Katie Morley added that tax specialists might not understand the situation clearly. Only the investors who spend relatively small amount may use the “loophole”. In other cases, they have to pay taxes.
Other experts claim that it is hard to claim to be a gambler by investing in a well-known cryptocurrency, like bitcoin. It is way easier to “hide” if you use less-known altcoins. However, other specialists claim that some markets are random and difficult to predict and, as a result, the profits can be considered as gambling.
UK regulators stated that they are going to formulate cryptocurrencies regulations. There are no doubts that the reason why they decided to do that is the increasing of the bitcoin price. The last attempt of formulating any regulations considering cryptocurrency dates back in 2014, but government took cryptocurrenc y as less of a revenue enhancement mechanism.
Experts state that according to UK tax laws, bitcoin is an asset and the first £11,000 is not taxed. Bitcoiners are safe if gains do not reach that amount, but if bitcoin holdings surpass that amount, then capital gains are triggered.