The terms associated with cryptocurrency, such as NFTs and digital wallets, remain a mysterious foreign language for many. But with cryptocurrency gaining in popularity, more people are seeking information to be able to make informed decisions about potential investment opportunities.
Cryptocurrency is a system that supports peer-to-peer digital transactions. Unlike traditional forms of currency, banks don’t verify these transactions. Instead, advanced computer coding records movement between the secure digital wallets of those making and receiving payments around the world. It is the encryption, used to process and verify transactions, that gives cryptocurrency its name.
All data relating to the individual units of any cryptocurrency are held in a public ledger called Distributed Ledger Technology (DLT) or blockchain. Which is highly resistant to hacking.
Cryptocurrency launched almost fourteen years ago. As technology evolves, new financial applications are being identified. It is thought that some bonds, stocks, and shares might be traded using blockchain in the future, and enthusiasts believe that a form of crypto may end up becoming our regular legal tender.
When it comes to understanding your tax liabilities and cryptocurrency; the purchase of cryptocurrency with GBP is not currently taxed in the UK. However, selling tokens, exchanging different forms of cryptocurrency, paying for goods or services, and gifting or donating your cryptoassets, are all activities that are liable to Capital Gains Tax. Selling and exchanging cryptocurrency could also have implications with Income Tax and National Insurance, if HMRC determines that the activity amounts to trade.
If cryptocurrency has you wondering where you stand, Ormerod Rutter have a dedicated cryptocurrency team who are ready to step in with the advice and tools to help. For an expert opinion, contact our friendly team at Ormerod Rutter on 01905 777600 or email us at [email protected]