Electronic Signature Licitness for Accounting and Tax in United Kingdom

How to eSign a document: electronic signature licitness for Accounting and Tax in United Kingdom

playing around with crypto be careful as a business accountant my team and i spent all day long helping business owners on their journey and of course look it's nearly 2022 one of the things we must get involved with and do quite frequently is tax on cryptocurrency so we're talking about you know your bitcoins your ethereum uh that we'll do another video on nfts if you come across those that's quite big as well so but in this particular one i just want to highlight some real key tax issues to watch out for if you're dealing with crypto now before we get into it if you like these type of videos make sure to click the subscribe button and the bell below so you get notified whenever we release more videos just like this one so let's talk crypto then what do you need to know and i'm going to keep it relatively short it's just really important to understand crypto firstly yes there are tax implications it's a very common question we get asked all the time i see it all over the web people are like i'm just doing a bit of crypto on the side like it's no big deal like there's no tax consequence to it now part the reason that prompted this video apart from all these conversations is that revenue and customs so the people that collect the tax um have written to a lot of you know general public in the last couple of weeks saying um just to let you know we've had some information from one of these crypto sort of marketplaces and we know you've been dealing with crypto just a reminder type thing uh we think you might need to do a tax return so they've got a lot of data so if you have been dealing with crypto and haven't done anything about it for tax purposes i think you really need to start thinking about that now because anything with revenue and customs if they come to you knowing there's a mistake and they force that inquiry there are very very hefty penalties for them doing that so you want to be up front and it's not a massively onerous task to go to them and say i've got something to tell you about like the you know pretty reasonable people about it it's not you know too bad a process and if you need help obviously there are accountants out there so that's the first one to know is that it is subject to tax now normally it's subject to something called capital gains tax you'll often see that referred to in right in a cgt but capital gains tax and that's the kind of tax when you invest in something and then sell it so if you invest in a buy to let property or some shares and then you sell those things at a profit normally you'll pay capital gains tax now that's quite a nice tax because you get a separate personal allowance so as an individual in the uk you normally get around 12 and a half grand a year depending on when you're watching this video of income you can earn tax free and you get a separate capital gains allowance it says you can have another sort of 12 and a bit grands worth of profit from selling stuff like that without paying any tax either so if you're dabbling on a little bit of crypto just investing and you might have sold it you know later in the year something like that you can generally be taxed under capital gains and if you're only making 12 or 12 odd grand in a tax year then you're not likely to pay any tax anyway but depending on the amounts you sell and the quantities you sell on things you're still likely to have to report this on a tax return so that'd be one of the action points of this is if you have been selling it going you're probably likely to need to declare it to the revenue there are some limits and things i'm not going to go too deep into it it's just being wary of it i'm sure if you check out gov.uk you can find out the particulars of when you should declare it or not but i just want to put that seed in your head that if you are selling it it's likely you're going to need to do one so they are subject to these capital gains now you think that's all right well i'm only really i'm only buying bitcoin and then trading it in for some ethereum or something like that or you know any of these other coins that are out there's tons of them now these days the thing is when you trade one coin for another what you're actually doing is disposing as it's known disposing of your bitcoin for example and buying another and when you dispose of it if you've made a profit from the time you bought it to the time you disposed of it there's going to be potential capital gains tax consequences so you've got to keep fantastic records of when you do that a lot of the marketplaces are now catching up on this we're seeing it with clients records you know going back a year ago those are just horrendous spreadsheets um that we have to trawl through because without getting too deep into it in this video there's some really complicated ways of calculating tax when you do sell these things because there are rules that say you know if you buy it in a certain amount if you sell it and you buy something else in a certain amount of time there's like this matching rule and all these things and depending on what you bought when it really matters so keep really good detailed records simple spreadsheet will do but as long as you've got all the dates transactions where it gets complicated of course is if you're buying it in different currencies if it's values in dollars what's the value in british pounds that can be quite a pain and a lot of these marketplaces are now doing brilliant reports where they can give you these reports so you can see i've seen a couple recently this week that are really nice as well so and there are apps that are being developed and i'm sure at some stage we'll probably do a review of some of the apps that are out there as well but do know you do need amazingly good records to do it because if you have got tax to pay you're going to need to know how to calculate and actually the capital gains rules are a lot more complex than just normal income tax sometimes just because you think if you do you're a i don't know so you're a taxi driver you know what your income is you know what your outgoings are there's a massive piece of skill around making sure that you've got the right amount of expenses and the right amount of income in the boxes but filling out the tax return is relatively straightforward and like a practical level however with a capital gains tax return you have to do these calculations to kind of know what to put in the boxes and that can get be very difficult with poor records as we've certainly found out through the time working with clients with this and they're very wide and varied now also the other thing that's worth bearing in mind is you could actually make a loss and making a loss so you can normally bring that forward and use it later when you do sell a profit so even if you're not making a profit you're actually selling a loss it can still be worth doing a tax return just to log those capital losses so if you're still dabbling and you think you might make a profit later you can use those and carry those forward now the other circumstances where you've got to be wary of this is when you buy something so it's not very mainstream at the moment but there are places where you can buy stuff with your bitcoins for example so you go and let's say you go and buy be stupid but let's just say you bought a cup of tea with your bitcoin you've again you've disposed of that bitcoin if there's been a profit since you bought it and since you've sold it and used it for for goods then you're also likely to pay capital gains tax so you have to be very very careful now there are other circumstances where you won't pay capital gains tax you might pay income tax and because it's so complex i'm not going to go too deep into it but let's just say if you're mining for example if you're crypto mining you'll know what this is if you're doing it that's likely to be kind of trading income and be subject to normal income taxes the same as if you were really like turning over loads and loads and it was a trade for you you know i'm changing all these coins but i think you have to be in a really high volume place for that to count but just do know there are circumstances where you could be classed not as as kind of capital gains taxes income tax as well so be wary of that and if you if you are doing high high volumes of it it's worth talking to professionals about how that might be treated especially if you've got quite a lot of mining income and they're the main tax issues you need to know so quick recap before you go just remember if you do have crypto keep really good records if you are exchanging them selling them anything like that you're going to need to think about whether you need to do a tax return and also remember hmrc have now got a lot of data on this so if you are doing it and thinking you're going under the radar it's very unlikely that's going to be the case for very long so there we go that's it couple of really key points on crypto please do share this with people that you think need to know this info and i'll see in the next one