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A picture taken on February 6, 2018 shows a visual representation of the digital crypto-currency Bitcoin, at the “Bitcoin Change” shop in the Israeli city of Tel Aviv. / AFP PHOTO / JACK GUEZJACK GUEZ/AFP/Getty Images

I’m a basic-rate taxpayer employed in IT and, by an amazing bit of luck, bought 1,000 bitcoins in 2012 for £5 each. I’ve been told they are now worth more than £4 million at the current exchange rate.
As this is a virtual currency, does that mean I have to declare the sale for tax purposes? I’ve been told any gain is tax free because the money doesn’t really exist in tangible form.

Geraint Jones, tax adviser at London and Cambridge accountancy firm BKL, replies: Virtual currencies, or cryptocurrencies as they are sometimes known, are becoming an increasingly popular way to transact.
As a result the value of some cryptocurrencies has risen beyond belief, and you are by no means unique in having become a bitcoin millionaire.
However, cryptocurrencies do have tax implications of their own.

HMRC has not introduced any new legislation that relates specifically to cryptocurrencies as it believes that the existing legislation is sufficient to impose any necessary tax.

 

 

 

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