HMRC considers changing Bitcoin taxes

Tax authority could reclassify virtual currencies amid fears that charging VAT forces exchanges to relocate abroad

HM Revenue & Customs plans to change how Bitcoin is taxed, dropping the guidance that sees it qualify for the 20pc value added tax (VAT).

The taxman is considering treating Bitcoin, and other virtual currencies, as an asset or as private money, rather than a voucher as was previously the case.

The move follows a surge in demand for the virtual currency. Bitcoin's value has been driven up by speculators and individuals attempting to circumvent currency restrictions, and hundreds of businesses have begun to accept it as payment. Authorities are also concerned about Bitcoin's potential as a device for money laundering.

The value of one Bitcoin on most exchanges has risen from under $50 a year ago to more than $1,200 during December. It currently sits slightly below $1,000 on Mt.Gox, one of the most popular trading exchanges.

VAT is charged at 20pc for any business above a threshold of £79,000 in annual revenues. For Bitcoin sellers who buy in bulk and sell at a low margin, this can make sales above that threshold unprofitable.

Source

http://www.telegraph.co.uk/finance/currency/10583859/HMRC-considers-changing-Bitcoin-taxes.html