Delight as Poole Museum awarded £2.24 million National Lottery funding for major development project

Cryptocurrencies

– the rise of digital assets: What are the UK tax consequences?

As is often the case in the world, especially in the technology sectors, things are changing at an alarming rate, such that traditional assets such as gold and silver are being replaced by digital equivalents.

I am of course talking about cryptocurrencies, or rather ‘cryptoassets’ (as we also now have Non Fungible Tokens – NFTs) as HMRC prefers to call them.

What is a cryptocurrency? The definition according to HMRC is: “Cryptoassets (also referred to as ‘tokens’ or ‘cryptocurrency’) are cryptographically secured digital representations of value or contractual rights that can be: • transferred • stored • traded electronically” Despite them largely being designed for utilisation as a form of digital currency, HMRC does not view them as ‘money’ or ‘currency’ and instead chooses to view them as assets.

Trading vs. Investing Transacting in cryptocurrencies is generally referred to as ‘trading’ cryptocurrencies, but this doesn’t automatically make you a trader for tax purposes.

In order to fall into the ‘trading’ category, your income generated from the buying and selling of the cryptocurrencies will likely be your primary source of income. This in turn will mean that total profits will be treated as charged to Income Tax, rather than Capital Gains Tax (CGT).

The vast majority of individuals will fall into the ‘investing’ category and as such will be holding an asset with the intention of making a capital gain, thereby being subject to CGT on their gains.

As the majority of individuals will be ‘investing’ in crypto, the remainder of this article will focus on the tax implications of this. Capital Gains Tax The amount you pay for cryptocurrency will be your base cost for tax purposes.

The world of cryptocurrency is a volatile one, so it is not uncommon to incur losses in a year. These losses can be offset against gains in future years.For tax purposes in the UK, cryptocurrency assets should be treated in the same way as stocks and shares by having their costs pooled together. This means that specific ordering rules must be applied to their purchase and sales.

As an example, let’s say that you purchased 10 Bitcoin in 2017 for £10,000 (£1,000 each) and then bought another 5 Bitcoin in 2020 for £35,000 (£7,000 each). This would leave you with a pooled (or average) purchase cost of £3,000 per Bitcoin. If you were to sell 1 of these Bitcoin for £20,000 in 2021, your gain would be £17,000. Allowable fees • There are fees that are tax deductible when calculating the capital gain, such as: • Fees paid for having the transaction included on the distributed ledger, • Exchange fees related to the acquisition or disposal of cryptocurrencies. • Foreign exchange fees for converting to or from, for example, GBP to USD are not allowable for tax purposes.

These may be incurred when initially depositing to, or extracting from, an exchange that only operates in USD. Negligible value claims If you lose or misplace cryptocurrency, this does not trigger a capital loss for CGT purposes. If you hold cryptocurrencies which are now worthless, then a negligible value claim could be made. This will result in a capital loss which can be offset against future gains. However, the cryptocurrencies must have been of value when bought and if during the time of ownership, the cryptocurrency fell in value this must be proved – if HMRC ever queries in the future. Points at which transactions become chargeable events If you use cryptocurrency to buy / sell in other markets, this can trigger a chargeable event. For example: • Exchange one cryptocurrency for another (for example, trading Bitcoin for another cryptocurrency) – you are realising a capital gain for the Bitcoin that you are disposing of, (this is often a point that is missed) • If you make a purchase with cryptocurrency (such as buying a car with some Bitcoin) – again, you are realising a capital gain for the Bitcoin that you are disposing of, • Even being paid in cryptocurrency by an employer instead of in regular currency – you are receiving an asset which has a value which will be the base cost for a future disposal. The proceeds to use in a capital gains calculation is the value of the asset that you are acquiring with your cryptocurrency (which is the deemed disposal).

It is therefore recommended to keep detailed records of all the cryptocurrencies you buy or sell. Summary The cryptocurrency sector is an extremely fast-paced one and HMRC is aware of them being more widely used, including as replacements for traditional currencies, so expect close scrutiny in the future.

If you have any questions about any potential tax implications relating to cryptocurrency, or would like further advice, please do get in touch and our specialist tax team will be happy to help you.

DRIVEN

Car Review: The New MG ZS EV

The new MG ZS EV has already made an impression – with its modernised design, updated tech and longer electric range earning it the title of Driving Electric’s Car of the Year 2022.

The first thing you’ll notice is its stylish facelift, with a newly designed grille-less front end and eye-catching ‘Silverstone’ headlights. Step inside the spacious cabin to discover the new touchscreen that controls the MG iSMART connectivity system. The MG Pilot Advanced Driver Assistance System is working behind the scenes to ensure a safe and relaxing driving experience.

You have the choice of two trim levels: Comfort and Luxury. I’m super impressed with the array of standard equipment in the Comfort trim, but for that extra-special experience, I’d choose the Luxury variant, with the panoramic sunroof, leather upholstery and 360-degree parking camera.

There are two batteries on offer too – the Long Range 70kWh version gives you a whopping 273 miles. You’ll also find plenty of oomph, with the 156PS powertrain reaching 0-60mph in just 8.2 seconds. Along the line, a 199-mile Standard Range battery will be available.

This performance comes with MG’s trademark value. The ZS EV is currently available at Hendy from £29,495, until the 31st March you can also receive a £500 test drive voucher! What’s not to like? Verdict: If you’re thinking about going electric but also need the space and practicality of a compact SUV, the MG ZS EV should be on your shortlist. Its Long-Range version undercuts some prestigious rivals in the segment! Add to that its affordability, impressive range, innovative tech, and seven-year/80,000-mile warranty – and it’s safe to say it gets a firm thumbs up from us!

Sound like the car for you? Why not book a test drive at our Poole showroom to experience it for yourself? www.hendy.co.uk

Enhanced Launch New Company Video

Leading IT consultancy Enhanced are delighted to announce the launch of their new communicative company video.

Enhanced have worked together with Thin Reel Media, a multi-talented video production company based in Bournemouth, to create a short yet creative and informative video. This is just part of Enhanced’s marketing development plan for 2022 and beyond.

The main reason behind creating this video was to make it easier for business owners to appreciate and understand how IT can support their business. Enhanced provides a holistic service offering both IT Support and Solutions to businesses across the UK – as it says in the final strapline of the video, “We make IT easy for your business”.

It was important for the footage to include genuine, original material and have a tone & pace that reflects the culture and authenticity of the business itself – not too showman, not too meek, not too, fast, not too slow…a creative piece that uses steady background music and applies a considered rhythm to reflect the company values of being Supportive, Efficient and Ambitious.

The first 30 seconds of the film demonstrates how Enhanced’s tech consultancy offering, deploys and supports clients with the latest solutions; showcasing a very high-level overview of the Microsoft Dynamics Business Central, Power BI platform.

The second half illustrates how Enhanced supports clients on a Fully Managed Service contract to keep their businesses running; offering remote and onsite assistance using online, text, voice and in person provision.

“We are excited to release this new asset for the brand. It showcases the premium service provided when a client requires day-to-day assistance for their business, be it solutions or infrastructure,” says Caroline OnslowBartlett, Head of Client Acquisition, Enhanced. www.enhanced.co.uk