Hey Steemit,

Below I will walk you through the 4 magic steps you can take to recognise £11,300 (or £22,600 if you have a spouse) TAX FREE whilst still maintaining exposure to the Crypto Market.

I will be releasing a Part 2 on how to be tax efficient with amounts greater then £11,300 for you BSD whales shortly.

Make sure to follow me to get notified when I publish part 2 as well as more useful content.

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DISCLAIMER

• The below is for UK tax payers, however laws in most Western countries should be similar
• I am not a financial adviser nor tax expert and this should not be construed as tax advice
• This post is intended to be the thoughts of a Crypto Hodler who is simply trying to keep busy as the alternative is crying myself to sleep as I refresh Blockfolio every 30 seconds...click here for meme

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Intro

Considering everything is all doom and gloom out in Cryptoland at the moment I thought, hey, let me make a positive post to cheer everyone up in the midst of the apocalyptic Crypto wasteland we currently reside in.

I know it's tough right now. You're just watching the $$ value of your portfolios go down whilst Crypto naysayers jeer at you repeating silly rhetoric like "Bitcoin is backed by nothing" and "Bitcoin is only used to buy drugs and launder money".

To which you should ALWAYS reply;

1. Financial Markets crash as well...currently the stock market is being propped up (manipulated?) by artificially suppressed Interest Rates and Quantitative Easing
2. The dollar is not backed by anything either. At least i know with BTC, inflation isn't making my money slightly more worthless every year. Also no one can just start pumping out more BTC if they wanted to like the Fed do with the dollar and cover it up by calling it something fancy like Quantitative Easing. * Shots Fired *
3. The US dollar is literally the currency of the black market. Check this report out which shows that 90% of dollar bills circulating in the US have traces of cocaine...

Anyway i've ventured off track. Lets get back to how talking about taxes is going to cheer you all up.

I know what some of you (all of you?) are thinking...Crypto Dino has lost the plot. Clearly the stress of this bear market has just got to him and he now thinks talking about taxes is going to get everyone pumped...

Stick with me, it'll be worth it

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What is Capital Gains Tax?

Definition: A tax levied on the profit from the sale of property or an investment. For this year It is charged on all gains realised between 1st April 2017 and 31st March 2018. I.e. if you sold anything in that period for a profit...it counts.

CRYPTO EXAMPLE: If I bought 1 Bitcoin on 1st April 2017 for $1000 then on 31st March 2018 you would have to pay a Capital Gains Tax (CGT) on your profit made. Let's assume you sold it at $15,000.

$15,000 - $1000 = $14,000 profit made in the year gross of tax.

Tax payable = $14,000 x CGT

CGT will depend on what tax band you are in. It will either mean you pay 10% CGT or 20% CGT.

To see what tax band you're in read this.

Continuing with the above example, Our friends in Westminster would receive a tax payment from you of $1,400 (10% multiplied by $14,000) if you are a basic taxpayer or $2,800 (20% multiplied by $14,000) if you're in the higher-rate.

Now that you get the basics on how the government takes your money lets talk about those 4 steps to be tax efficient i.e. make you pay less tax.

LOL - this meme made me chuckle

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How to be Tax Efficient

We can reduce the amount we have to pay by utilising the Capital Gains Tax Free allowance of £11,300 a year everyone is entitled to. If you have a spouse then you can combine this to £22,600. Very nice Borat Voice.

Therefor, every tax year you want to be selling enough Crypto on 1st March 2018 to recognise a tax free profit within your allowance (£11,300 for individuals or £22,600 with your spouse).

Why did I say 1st March ?

The government realised in the late 90's people were just selling shares on the 31st March and re-buying 1st April yet pocking the tax allowance over night.

So they implemented the 30-day rule. Now, over 30 days has to elapse between the sale and purchase in order to have the desired effect. Otherwise, you’re treated as though you never sold them.

Sucks though right? 30 days is a long time in the Crypto-verse and you may miss out on huge gains just so you can pocket your tax free allowance...what if Bitcoin doubles in March? That £11,300 profit you cashed out could have been $22,600 or more!

I have a solution though...

Who said you can't have your cake and eat it?

What if I told you that you could both pocket your £11,300 tax free allowance AND still ride the Crypto rocket to the moon in the month of March legally?

Let me introduce you to the world of Spread betting. Read here for a background to this.

The important thing to know is that Spread Betting is 100% TAX FREE * woohouuuu *... so now lets walk through the 4 magic steps to show you how you're going to stick it to the MAN.

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4 Magic Steps

STEP 1: You sell your Crypto to recognise a profit of up to £11,300 on 1st March 2018 which makes you eligible to recognise this money as part of your tax free allowance.

STEP 2: That same day, open an account at IG or another broker offering spread betting on Cryptos.

Note: Spread betting is not the same as CFD (CFD is taxable)

STEP 3: With your £11,300 (or less) buy the Cryptos of your choice on the spread betting platform to maintain a long (buy) exposure to the Crypto between 1st March 2018 and 31st March 2018.

STEP 4: 1st April 2018 close out (sell) your position on the spread bet account and withdraw all the cash into your bank account.

If all things went to plan and the price increased, then LUCKY you, all that money (initial amount + gain) is tax free. So you can just re buy the physical coins on exchange again. Or go buy a Cryptokitty or a real kitty...whatever I won't judge.

Highlight: With these 4 steps you've been able to recognise a tax free amount in your bank account of up to £11,300 (have your cake) and maintain exposure to the Crypto market during the 30 day period required (eat your cake).

Important Notes

1. Keep a log of EVERYTHING, even if you do it properly, the tax man may ask you for proof and it's important you can show an audit trail.
2. Do not spread bet or use CFD's outside of using it to be tax efficient in this specific instance. I'm not going into detail why as this post is already way longer than intended, but just don't do it. You will most likely end up losing money in the long run. (If there is demand i'm happy to make an article on it).

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Summary

So to wrap this up.

• You have £11,300 tax free every year (£22,600 with your spouse)
• Sell enough Crypto to recognise a profit of £11,300 or less on 1st March 2018
• Take that money and enter into a spread bet on Crypto with your £11,300
• 1st April 2018, close out your spread bet position and withdraw to your bank account
• That is now all tax free money you can do with as you please
• TRACK everything and save it somewhere in case one day the tax man comes knocking

If you feel like the above still sounded like Chinese then comment below your questions or DM me on Twitter here - I'm happy to help!

Catch you all later!

Crypto Dino