At the time that I write this, Bitcoin has risen 50% over the last month and if you were brave enough to buy at the bottom of the market you are probably feeling pretty pleased with yourself right now.
By Chris Davies
But a word of caution. We saw a boom in cryptocurrency between April 2020 and April 2021, with bitcoin rising 800% in that time. A lot of people made a lot of money in that year which needed to be reported on their 20/21 tax returns. But what they did not do is put aside any of that money for tax.
Since its peak we have seen a 65% decline in cryptocurrency values and some investors have been unable to pay the tax due and that has left them with serious financial problems.
Certainly there may be an element of unfairness that one cannot offset current year losses against prior year gains, but that’s just the way that the rules work and we have to plan within them.
So before you get carried away with the current mini-boom in prices, do please consider how you are going to pay the tax on the gains that you make. Using some software and/or seeking the advice of a crypto tax specialist is strongly recommended.
Crypto tax can be very complicated and it’s worth taking professional advice from a crypto tax accountant. If you would like to speak to one of our crypto accountants or obtain a quote for assistance with your crypto tax affairs please do get in touch via the contact form below.