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Dentists Who Invest

Podcast Episode

Dr James: 0:41

Fans of the Dennis who Invest podcast. If you feel like there was one particular episode in the back catalog in the anthology of Dennis who Invest podcast episodes that really, really, really was massively valuable to you, feel free to share that with a fellow dental colleague who’s in a similar position, so their understanding of finance can be elevated and they can hit the next level of financial success in their life. Also, as well as that, if you could take two seconds to rate and review this podcast, it would mean the world. To me, what that would mean is that it drives this podcast further in terms of reach so that more dentists across the world can be able to benefit from the knowledge contained therein. Welcome, welcome to the Dennis who Invest podcast. Welcome everybody to Mike and I’s Crypto Tax Q&A. Ask me anything band-aid for your crypto taxes. Welcome everyone. This will be super fun because I know that tax is relevant to every one of us in our crypto affairs, but it is something that doesn’t get fleshed out and talked about enough, and that’s why I have arranged this Q&A with my good friend, mike Bryan, very, very knowledgeable accountant and it’s specialist dental accountant, by the way who has a keen interest in crypto. So he is uniquely come on. That’s like a gift from the heavens right. That’s every single box ticked in terms of a dental accountant who also trades crypto. That’s like bang on the money for what a lot of us need and a real, real, real niche there. So I’m not going to do very much talking. I’m going to pass the reins over to Mike. Mike is going to be our croupier, the man in charge tonight, and Mike’s going to give his presentation and then we’re going to have a brilliant Q&A at the end. I know it’s going to be brilliant, because it was brilliant last time. Over to you, mike.

Mike: 2:25

Thanks, james. Hi guys, thanks for giving up some of your Sunday to listen to all things tax. This thrilling is tax can be. It normally does pick up quite a good audience because, believe it or not, it’s going to be the most expensive thing. You’re paying your career and even if you buy that dream practice, your tax bill will well outweigh the cost of the practice. So what I’m going to do I think I’ve got the ability to do so I’m going to share my screen.

Dr James: 2:53

I just made you the host, mike. I’ve just made you the host, so what you can do as well if you like. My friend, if you like, click your your thumbnail and hit pin. Then you’ll take up the full screen, have you? Did you catch that?

Mike: 3:09

Yeah, got it. Yeah, and then I’m going to share my screen. We’re going to go for anyone that’s seen this before. We are going to go over some old ground and maybe duplicating something that we’ve done a couple of months ago, but certainly there’s some new things in there. There’s been some announcements and some new thought processes that HMRC have gone through, so, without further ado, let’s just Beautiful. We all see that. Is that working, james? It looks good to me my friend. Cool Thanks.

Dr James: 3:47

So James yeah kindly introduced me.

Mike: 3:48

I’m a partner at Humphrey Co. We’re dental accountants. We act for 1500 dentists nationwide. We’re members of the organizations on the screen. That’s me. That’s my contact details. I’m in the Facebook groups that you’re all members of, so if you need me, just pick me up from your DM and I’ll come back to you when I can. As James always alludes to, don’t rely on anything we speak about now because you need to be tailored to your individual circumstances. What are we going to cover? I mean, I imagine I’ll take probably 30 minutes of your time going through this and then the Q&A at the end. James, I think, if he’s kind enough, will monitor the chat boxes. So if you do have questions, pop them in the chat boxes, Feel free to shout them out, Feel free to put your hand up and we’ll come to you as we go. We’re going to talk about taxes CGT, which is the main one for the majority in the room, Some other points, anyone trading as limited companies, and then the Q&A at the end. So, to jump straight in, there’s four possible options for you with cryptocurrencies and things you need to think about Income tax, CGT, corporation tax and no tax at all, Of course, the final one being the one that everyone wishes is true, but we’ll cover that in a minute. So income tax for the majority of you in the room probably isn’t going to be relevant. If you are doing any mining, any transaction approvals, any airdrops and things like that, then income tax will be relevant for you and for any of you that are a sole trade dentist or have been a sole trade tent dentist, that will be taxed at your effective rate, be it 20%, be it 40%, be it 45%. It depends on your other income. As to what percentage that will fall in, it needs to be declared on your tax return as you go. It would be unusual. As I mentioned and HMRC have, I’ll put the links at the end of the presentation. If any of you want slides, just drop me an email, drop me a message and I’ll ping them over to you. Hmrc have specific crypto guidance and legislation. It’s all quite new. It’s constantly being updated. There’s even an HMRC forum which people are allowed to post questions on, and HMRC will come back to as well. There’s a lot of information on there, but if you guys ever want to look at it. But HMRC have said it’s unusual for crypto trades to be taxed under income tax rules, the main reason being that it needs to be almost like a full-time job in order for it to be income tax. So those of you that are trading even you’re regularly trading it’s unlikely that it will be income tax. It’s more likely that it will be CGTIC, which we’ll come onto. Use of bots I’ve got a few clients now that are looking at using bots and making automatic trades when specifics come into line. For me that’s and I’m theorizing it is more like mining. It is more using specific algorithms in order to make trades and may well fall under income tax. And if anyone is using bots, then definitely take advice on your own specific interest, on your specific circumstances. Defi or any kind of staking I think could be interest. Hmrc’s definition of interest income is pretty much if it smells like interest. If it looks like interest, it probably is interest and you can work it out that peer-to-peer lending is interest. If you pay money on debt because you borrow from a friend, then that would be interest income if you’re lending the money and so you should be able to take that into a crypto world. And if you are essentially lending cryptocurrency to someone and someone is paying you a return because you are lending them that money, then it may well be interest. It could be in your interest for it to be interest Because, if you’re not aware, everyone gets £500, or not everyone. Most people get £500 or £1,000 of tax-free interest every year. If your total income personal income is under 50K, you’ll get £1,000 of tax-free interest. If your income is not over the additional rate you’re not paying income at 45% then you will get £500 of tax-free income and therefore, manipulating your finances to have some interest, if it’s possible, could well be a sensible thing to do because it could well be tax-free. The main one for you guys anyone that’s personally investing in cryptocurrency it’s going to be CGT Capital Games Tax. It could be corporation tax, but only if you are trading via a limited company, but some of you out there will have limited companies. Some of you may well have jumped through the hoops on Kraken or Binance or another platform that gets your limited company’s name on the legal documents of who owns this wallet and trade and stuff like that. And if you have done that and it’s very important that you jump through the hoops you can’t just have a personal account and designate it. Your company’s account needs to be in your company’s name. Then you will pay corporation tax on income and capital gains tax, and companies have income tax and capital gains tax. They’re just both corporation tax rates at about 19% of the moment. We’ll be going up to potentially 25% in April 2023. Let’s just let someone in there with corporation tax and then no tax. The fourth one in there that I mentioned Historically, you could get away with calling a cryptocurrency investment gambling and, if you’re not aware, gambling in the UK is tax-free. If you win in the casino, you don’t pay any tax on that. In fact, the casino payers are tax-reliant to gamble, but that’s a different story for a different day. I have a client who invested in Bitcoin in 2014, I don’t know a long, long, long time ago and he put about 20 grand in and he was valued at about 8 million quid a couple of Christmases ago and then about two weeks after Christmas he was valued about 4 million quid. It’s very volatile 2017, 2018,.

Dr James: 11:04

Right, that would have been it. So is that again 2017, 2018, the end of the last bull run. That sounds about right, yeah yeah, could have been.

Mike: 11:13

Yeah, absolutely, and bless him. He didn’t have a bank account that allowed him to cash out, so actually he was stuck. He couldn’t get his money out. He eventually did get one, but, yeah, it’s very volatile, anyway, for him, the point being because he was in it such a long time ago. We have argued that some of that was gambling. Okay, that was allowed, but HMRC have now come out and said categorically that cryptocurrency investment is not gambling and therefore you cannot avoid tax if you’re trading in cryptocurrency. So, to drill down into the main one there, cgt. People think CGT is simple. In the main it is. If you’re doing very simple trades, okay, have you buy something and then sell something. Again is one the sell value less the proceeds value. But if you’re averaging in, for example when you’re buying Bitcoin at different values, then actually working out that value is quite complex. Okay. So there’s the process you find your sales value, you deduct your cost to sell, you deduct your tax base cost, in other words, your purchase price. But it’s not as simple as that. Deduct any cost to buy so any you know any agent’s cost, any platform costs, and then whatever you’ve got left is your gain or your loss, and that’s what we need to report to HMRC. The most complex thing there is calculating your tax base cost. Okay, sales value simple the amount you sell it for. Cost to buy. Cost to sell simple the amounts that you’re charged in order to buy or sell cryptocurrency and the base cost not so simple. So let’s just do this quickly. Before we look at the base cost, we’ll just look at the CGT allowance. So everyone gets a CGT allowance. At the moment it’s £12,300 in this current tax year means you can make a gain of £12,300 and not pay any capital gains tax. It’s very, very nice allowance. It means that a lot of you will fall out of the need of actually reporting your gains to HMRC. When you go over it, you need to report it. If you sell something for four times the amount of £12,300, four times the annual allowance, you still need to report it, irrelevant if there’s any tax to pay or not. And if you don’t, you can get penalised and you can get quite severe penalties. If you’re living this alone, it doesn’t get abated just like your, not like your income tax. For anyone out there that earns over £100,000, we’ll realise that the personal allowance does get abated. If you’re a sole trade dentist which is very expensive It’ll cost you about £5,000 a year. You go through the if you’re earning up between £100,000 and £125,000. Cgt doesn’t work that way. Cgt is a flat amount and it stays £12,300. It doesn’t matter if you earn £1 or £10 million. It remains it’s per person. And if you have a spouse, then there is the ability to transfer assets, investments, cryptocurrency to your spouse at nil gain, nil loss. That means that doesn’t trigger tax and then get them to sell. If you were sitting on a £25,000 gain and you wanted all your cash and your spouse had no other gains, you could transfer half of your £25,000 to your spouse and then get you both to sell it at the same time and you would pay any tax against this and clever planning there. If you are married and your spouse is happy for you to use their personal allowances, you do need to set it up properly Again. You can’t fudge it. You can’t just sell it and then say, oh, half of it was my spouse’s. You need to physically set your spouse up on the platform, transfer that cash. You can’t cross, sell it and do it all properly. It’s valuable and it’s potential to change and if HMRC wants to make it less attractive to trading in crypto currency, the easiest thing is for them to remove or reduce the £12,300. It is possible, so keep an eye on it. The rate is 10 or 20%, unless it’s for crypto. Residential properties are different, but for crypto it’s 10 or 20% and, quite simply, if you’re a basic rate taxpayer, it will be 10%. If you’re a higher rate taxpayer, it will be 20%. If you straddle the higher rate tax £50,270 in this tax year, then it’s not clear, fair to what that means is the amount below £50,000 will be taxed at 10%. The amount over £50,000 will be taxed at 20%. To reiterate that you look at your personal income, dental income, any other income you’ve got teaching income, any employment you’re doing and then you see if that is going over the £50,000 or not. If it’s already over £50,000, everything at the higher rate. If it’s under, then some will be at 10% and some may be at 20%. That’s after you take off the £12,300 tax ring of CGT for income. This is massive and this is something that a lot of people didn’t understand at the beginning of cryptocurrency, but it is pretty common knowledge now. If you trade between Bitcoin and another coin, that is a taxable event. A lot of people thought if I don’t take it back to fiat, I’m not going to have to declare anything. That’s not true. If you move from one coin to another coin, then that is a taxable event. You need to calculate the gain to see if it’s taxable, and you need to do that over a tax year. Work out your total gain to then work out if it needs to go on your tax return. The amount of people that will be missing this is huge and therefore the amount of effort that HMRC will put into looking at this will also be pretty substantial, because they know that there’s a big hole there with people that aren’t recording and declaring their gains from cryptocurrency trading. Let’s go back to where I thought we were going a minute ago. The base cost, the most complex thing to calculate. The first thing to think about is this thing called price average rules. This gets a bit number heavy now, but you can’t just look at. I’m selling Bitcoin and the last Bitcoin I bought was X amount and therefore that’s the Bitcoin I’m selling. You don’t choose which Bitcoin you’re selling. There is a rule that you need to use in order to calculate the value of your Bitcoin holdings, or whatever coin you’re holding when you sell it. We look at a scenario. In this scenario, we’ve got four transactions of varying values of Bitcoin purchases a quarter of a Bitcoin purchased at £1,000 per Bitcoin, and then another quarter at £2,000, another quarter at £2,500 and then at the end, one and a quarter of Bitcoin is at £3,500. Again, don’t get too bogged down in the numbers. Simply, if you were selling Bitcoin, you would find the average cost of your Bitcoin to work out. Again, in this example, the average cost was £2,875 per Bitcoin. If you add up all of the costs on the right, you’ll get the total cost is £5,750 and they’ve got two Bitcoins and therefore each Bitcoin is £2,875. You can see that if you’re trading a lot of Bitcoins or another coin, that doing this every single time is going to be very time consuming, and more so if you’re doing at the end of the year, after having a year’s worth of trading, you can get very bogged down. I know some of my clients have spent weeks going through their historic trading to try and work out what trades are done, to try and work out whether there’s any gains to be reported to HMOS. Do it as you go or use software that’s going to calculate it for you. If you’re going to use software, just bet it, because there’s some poor software out there that perhaps was American made and they haven’t really thought about the UK rules when they transferred it over to a UK platform.

Dr James: 21:11

Can I just say one thing on that, mike? There is one called Coinly which I used to use, but with time I realised it’s the most common crypto tax software. With time I realised that they will happily let you tick the box on the website which says you’re from the UK and then you would be working on the presumption that they’ve calculated it accurately. For the UK it actually doesn’t whatsoever. So I’ve learned of a website since called Recapio and, as probably already discerned from Mike’s lectures, from what Mike’s lecture has been saying so far, that it is very difficult to track your affairs, given that you have to calculate your average price of entry. Also that it isn’t just applicable when you crystallise into fiat, it’s applicable when you crystallise into Tether, usdc, anything. It’s so much easier to have software that does it for you. So Recapio is the best software that I’ve found for those in the UK who want to ensure that their CGT is accurate come the end of the tax year. I just wanted to jump in and say that because I thought that would help things, mike. Real quick, guys. I’ve put together a special report for Dentist entitled the Seven Costs and Potentially Disasters Mistakes. The Dentist may, whenever it comes to their finances. Most of the time, dentist are going through these issues and they don’t even necessarily realise that they’re happening until they have their eyes opened, and that is the purpose of this report. You can go ahead and receive your free report by heading on over to wwwdenisoonvestcom forward slash podcast report or, alternatively, you can download it using the link in the description. This report details these seven most common issues. However, most importantly, it also shows you how to fix them Really. Looking forwards to hearing your thoughts.

Mike: 23:12

Absolutely, james. Thanks for that. Appreciate it Again. Just to reiterate, so as someone else in the waiting room, just to reiterate that if your gains are quite small and you’re only dabbling in crypto at the moment, then you can probably ignore it because you’re not going to go over that £12,300. What is, if you’re ignoring it now and you start doing better putting more in, injecting more cash in is then working backwards to find out what your original base cost is. So if you’re like me, I have a spreadsheet, as sad as I am, and my spreadsheet tells me pretty much everything I need to know about my current holdings. So we just look at an example in this scenario. Oh no, sorry, let’s look at this. Actually, why bother? Why do we do this? It’s all about manipulation and it’s all about standardisation. Fifo is first in, first out and it’s something that the councillors would talk about. If you looked at a FIFO cost basis here, which means looking at the first bitcoins you bought, then actually the cost here would be £2,075 per bitcoin. If you were selling a bitcoin. I think this looks that If it was LIFO last in, first out, which means you’re looking at the latest purchase, then actually the cost is £3,500 for one bitcoin and you can see that that makes a huge difference in the calculation to HMRC. That makes a huge difference in the calculation to HMRC as to actually what your gain is going to be, and therefore it’s very important that there’s a standardisation to stop people manipulating it, because if I could pick one particular bitcoin that I wanted to sell, then I can always make sure that I’m using all my reliefs available, that I’m not going over a taxable event, that there’s possible ways that I can get away with not paying as much tax and beating the system. We’ll look at it in a bit more detail as well, because unfortunately, it’s not as simple as that never is with tax. But in this example, yeah, if they sell 0.4 Bitcoin for £4,000, then you can see that the cost is one Bitcoin, which is half of the 275. And they wouldn’t pay any CGT in this year because they’re below the £12,300. Now take it one step further. I’m not going to get too bogged down in this, because this is very high level. This is exactly what your accountant should be looking at for you, but it is quite important for you guys that are trading. There’s two other important things to think about when you calculate that base cost and it’s share matching rules and it means that whenever you sell something, you buy something on the same day, then they’ll use that transaction first, and if you buy something within 30 days of selling something, then they’ll use that transaction first as well. And if you’re trading, actually, this can be a benefit in some way because you’re deferring capital gains tax. And the reason it was bought in is because, as I mentioned, the £12,300 CGT allowance is quite valuable, and what people used to do is they’ll get to the end of the tax year, they’ll realise they haven’t used their capital gains tax allowance and therefore they would sell some of their crypto and we’ll be talking about crypto be stocks and shares when this first came in in order to get that gain, and then they’ll buy it back on the same day or the day after, and so they’ve crystallised this gain up to the value of the CGT allowance without actually paying any tax, and therefore, if they sold that stock or shares in the future, they would pay a lot less tax because this base cost had just gone up by the personal allowance. It’s very good for planning if you’re looking at CGT and we’ll talk about that in a minute but if you’re looking at crystallising gains, it means that you need to sell something and not buy it back for 30 days. So if you want to crystallise a gain, you can’t buy that coin back, you can buy a different coin. So, as we mentioned, different coins are different coins. You can’t buy the same coin. We’ll get to book down in this but you can see that. Well, let’s go through it for an example. There’s some transactions, as you can see I won’t read them out, but there’s one that happens on the same day and there’s one that happens within 30 days the bottom two there, the same day, there and then 30 days. So if we looked at actually what the base cost was for this example, you would take the Bitcoin bought on the same day that you sold Bitcoin first, which is shown here. We sold just above the line above £4,000 was the sale we were looking at and then we bought some Bitcoin back because the price dropped on that day. It would be a sensible amount, but for HMRC purposes, we need to use that value for this game. We would then buy look at the purchase that was within 30 days of the sale, which is shown here, just to go back and then we would look at the price averaging. I’ll show you why it’s important. In the minute that we do all of this, this is the price of the Bitcoin the minute that we do all of this. This is the price averaging that was shown on the previous screen 2875. So they sold 0.8 Bitcoin on the 10th of the 10th. That’s made up of 0.2 on the same day, 0.3 that’s purchased within 30 days and 0.3 of the historic portfolio. So your total base cost is 3,187. So for this one trade, they sold £4,000 worth of Bitcoin. The base cost is £3,187. Now, if this wasn’t true and these rules weren’t around, then the cost would have been £2,300. And the game would have been a lot bigger 813 compared to 1,700. Now for you guys, if you’re making trades, if the figures are bigger than these figures, if that’s just these figures, then again it’s within that personal allowance. It’s not too troublesome. But if they’re bigger and you’re doing more trades, you need to be calculating this because of HMRC coming us and look at your records. Then that’s how they’re going to calculate it and there’s a massive difference between knowing the rules and not knowing the rules. Again, it’s all about manipulation. Quite simply, it’s the reasons that put these rules in place. Still, good plan to be done. As I mentioned, always aim to crystallise your £12,300 personal allowance, if you can. Why? If you invested in Bitcoin 10 grand a year we make some assumptions 10 grand a year for five years and the price went up 20% a year. Lovely position to be in. If you didn’t plan it carefully, as an accountant should advise you to, then in this example you would have lost out on about two and a half grand. You would have paid two and a half grand more tax should you have exited your position five years after entering it. So with good planning you can minimise that tax. Also, quite a nice tip again for those of you that are married and spouses and interested in perhaps what you’re doing in the crypto world or other investment world, is that you can to avoid bed and breakfasting. You can sell from your portfolio and read buy from your spouse’s portfolio. Okay, that’s allowed and that doesn’t get caught by bed and breakfasting. So if you wanted to crystallise something but you didn’t want to be exposed to risk because of the price volatile of the investment in between that 30 day period, then you can exit the position and let your spouse enter the position the next day, and that’s fine. Again, just clever planning. Tgt allowance is use it or lose it. So if you don’t use it, you can’t carry forward, it is lost. And actually just point here that I thought was quite interesting Bed and breakfasting could be beneficial for those that are trading. So if you’re doing lots of trades, actually the way the rules work is you’re deferring that capital gains tax and that’s essentially exactly the opposite of what the exact reason that HMRC bought these rules in, because the reason bed and breakfasting rules are there is to stop people crystallising that gain within the annual allowance exemptions and therefore, actually you can defer your CGT gains if you make sure that you enter the position within 30 days of exiting it. Just some quick other points on crypto which will be relevant for you guys, especially with capital gains tax, 5th of April is the end of the tax year. Therefore, if you crystallise the gain on the 5th of April, you’ll pay tax about 10 months after, in January. If you crystallised the gain a day later, you would pay tax a year later. So planning when you crystallise things is also quite important. If you want to exit a trade and get your cash out, then if you’re near April, you may be best just waiting until 6th of April in order to sell that particular asset. Anyone that’s a hodl or has pregnant gains, it’s true. If you don’t sell, you’re not going to pay any tax. Absolutely that’s the way it works in the UK. Different in America. You can pay tax in America on pregnant gains, which is a pretty rubbish position to be in because your cash is all locked up in this investment. Even though that investment is done well, you still don’t have any cash and you pay tax on that. In the UK that’s not true. You only pay tax when you crystallise a gain, when you sell it. So if you don’t sell it, then you’re not going to pay the tax, but you are going to obviously be at risk to price variations, and this is massive. Anyone that’s not got a will needs to get a will, especially if you’ve got some decent crypto investments. I know of dentists that unfortunately, have died and no one can get into their wallet because they haven’t provided the information anywhere and also it’s not made it onto their will. So if you want your crypto portfolio to pass on to benefactors, then you need to make sure your will is updated and you also need to make sure that there’s some mechanism in place to get into your wallet and get those investments out. Yeah, we touched on tax reporting software. James has given you a good one, recapio. That mentions this reporting requirement. If you’re selling assets that are four times the annual allowance, you need to report it, irrelevant if there’s gains or not, or tax debate or not, make sure you declare losses as well. Any of you that are entrepreneurs running your own dental practice going to have gains at some point in the future. If you make any losses, so long you report them to HMRC, they will offset future gains. So if you have any bad investments, then definitely make sure you’re reporting them to HMRC. You should report them in the year you make them. Technically it’s not that strict, to be perfectly honest, but you should report them. And yet tax will change. So look at limited companies. Some of you in the room will be limited companies trading as limited companies for your dentistry. If you’re a dental practice, then I pretty strongly suggest you don’t bother putting these weird and wonderful cryptocurrency investments within that limited company, the reason being is it saleable? Can you sell that asset? Will someone buy that asset? A dental practice obviously is valuable. We all know that the goodwill values have got at the moment in practices and therefore, if you’re selling that company to someone in the future, don’t want to muddy the waters with saying, yes, I want you to buy my dental practice, you can buy the shares in my company. Oh, by the way, there’s been some weird cryptocurrency investments in the past 5, 10 years. That’s going to scare them. They’re not going to like that. They probably won’t understand it and therefore you might be forced to sell the assets of your dental practice rather than the shares of your dental practice. And if you are a principal trading as a limited company, then you will pay a lot more tax. You probably will pay a lot more tax if you sell the assets of your dental practice rather than selling the shares of your dental company. You’ll get something known as entrepreneur’s relief or business asset disposal relief. When you sell a dental practice 10% tax you won’t if you sell the assets and if you’ve got some cryptocurrency investments in there, you may blur the trading status of your company. If you’re an associate, I’ve got no real qualms against you having some cryptocurrency trading in your limited company, because no one’s going to come buy your associate company. There’s a lot more personal to you and therefore there’s no big issue about doing some trades within that limited company. If you’re a practice, think of a company structure. If you want to do it with a limited company, create a new limited company. It could be a holding company, it could be a family investment company, it could be just another sister company and get them to do it that way, because you’re not going to then force the buyer of the dental practice to buy these historic trades as well. Companies don’t get a CGT allowance. This is the main negative of trading by a company. As we mentioned personal trades, you’ll get £12,300 of tax-free CGT. Companies don’t get that. They make £1 worth of gain. They will pay tax on that £1. So if you’re just dabbling, if your expected gains are under 12 grand a year, then you’re best off doing it. Finally, there’s no real point doing it in a company. Reason you may do it in a company is probably to avoid you taking cash out of your company. You take cash out of your company, you’ll pay a dividend 32.5%, more than likely for most of you Then you’ll have to invest that in crypto. Some of you will want to do it via a limited company. If you do, then you’ll pay corporation tax rates on that income, on that gain, and it’s just 19% flat rate. That is going up to 25%, to a maximum of 25% in April 2023. Whether it’s a good idea to use a limited company is dependent on you and whether you can get that cash out at cheaper dividend rates or watch your long-term plan with the cash If you have a low-earning spouse that you can get some cash out of. Personally, I’d always want to do something like this in my personal name because of that £12,300 yearly exemption. The increase in corporation tax is obviously going to have an impact as well. I’ve got a client that’s looking at doing some serious trades via a bot and he’s going to set himself up as a limited company because we’re concerned that HMRC would deem that to be income tax. For him. That would mean paying tax at 40% because he’s a higher-rate taxpayer already. He’s employed. He’s not a dentist, he’s trapped himself, but he’s employed. He’s already got a salary of $60,000, I think. Therefore, if HMRC did deem the bots profits to be income, he would pay tax at 40%, whereas in the company he would pay 19%. In that example, we are going to put him into an intercompany structure. As I mentioned at the beginning, there’s a whole crypto asset manual that you guys can look at. You can read it. It’s not very exciting. I’ve read it a few times. There’s also a forum on there. This is the first time I’ve seen HMRC do a forum. They don’t send emails For them to do such things. A forum is pretty out there for HMRC. That’s got quite a lot of crypto currency questions on it. Actually, it could be a good source of knowledge for you guys if you have sporadic questions. Obviously, the main go-to for anything about your taxes and crypto currency would be your accountant. That’s me. As I mentioned Facebook, you’ve all got me on Facebook. I’m a member of that group there. We will feel free to just drop me a message on that platform. Go ahead, james. It’s gone, but let’s open it up. Is there any questions?

Dr James: 43:28

I am here, my friend. I was just about to jump in to say thank you. Feel free to on-share your screen so we can see your face once more for the Q&As. I see Whilst you’re doing that. I just want to say a big thanks to everybody on behalf of there we are Magic, we’re back. We’re back Brilliant. I just want to say, oh wow, we’ve got quite a full house now. I’ve got quite a few people in here. I just want to say thank you on behalf of everybody to Mike for that really informative presentation on all things tax and how it’s relevant to dentists. Well, just not even specifically dentists, just generally people who trade crypto. Thank you so much for that, mike. We are now going to throw the mic out to the audience for everybody to jump in and participate with their questions, anything that they’d like to ask Mike what we’re going to do before. Oh, tim, okay, tim, you go ahead Far away, mate. Go for it, buddy.

Speaker 4: 44:25

Mike, thanks so much. That’s very informative. Just a quick question Does the government recognise cryptocurrency as a legal currency? No, so how do they charge tax for it? How comes they take in revenue office for it?

Mike: 44:42

Because, although they don’t treat it as a currency, they treat it as an asset. So if you went on HMRC’s website. They refer to it as crypto assets, not cryptocurrency. And just like you can invest in gold and then sell gold, that would be a CGT and that’s why they can tax it. That’s why it falls into CGT rules. Okay, cool, Not necessarily gold.

Speaker 4: 45:07

It could be any commodity. Yeah, yeah, yeah, I understand that. But yeah, it’s funny how they can take money from something but don’t recognise it in another hand, absolutely.

Dr James: 45:15

But the tax Sorry, Mike.

Speaker 2: 45:18

The tax it as they earn it, the tax it as you sell it.

Mike: 45:21

The tax it as you die, the tax it when you buy it, the tax it at some point. So, yeah, they’re going to get their fair share somehow. And this is them making sure they get some tax on some of it.

Speaker 4: 45:32

So if I left all my crypto currency in Bitcoin, would I still have a tax year on year?

Mike: 45:40

No, no, not at all. So if you just left it, if you’re a hobbler and you just bought it and left it, there would be absolutely no tax on that, With the exception of when you died. And if you died, it would go into your estate and would form a potentially be taxed under inheritance tax rules.

Speaker 4: 46:00

Right, so if I used old coins to gain Bitcoin, then I wouldn’t pay any tax.

Mike: 46:07

Depends if there’s a gain when you went from the old coin to the Bitcoin. There would be yeah, so that’s a chargeable event and that would. Yes, that would mean that you would pay capital gains tax on that. So if you bought an old coin for £1,000 and then transferred that old coin, when it was valued at £5,000, into Bitcoin, that’s your chargeable event £5,000 less one grand. That needs to go on yes, £4,000 on your tax return as CGT capital gains tax.

Speaker 4: 46:36

Yeah, less my office expenses and all the rest of it.

Mike: 46:41

You can’t deduct it for CGT rules, unfortunately.

Speaker 2: 46:45

So you have to deduct that from your dental income?

Mike: 46:48

Well, I’m not a dentist.

Speaker 4: 46:50

So but yeah, okay, no, okay Cool, I’m just trying to get my head round how it all works. Yeah.

Speaker 2: 46:56

So yeah, okay.

Mike: 47:00

See, for CGT there was a good point actually, tim. So those that have trading businesses will obviously be offsetting office expenses. You know, computer costs, stuff like that. With CGT you can’t do that. The rules are completely different. It’s very stringent as to what you can actually allow to claim against that game. It’s literally costs to buy that asset, costs to sell that asset. They’re the only two things that you can really take advantage of when calculating the game.

Speaker 4: 47:33

Thank you very much. That’s fantastic. Thank you right.

Dr James: 47:38

You’re probably beginning to see, tim, that if you trade a lot it can get very complex. You know if you’re dipping in and out of different currencies. Are you with me? So you know that software recapio, yeah.

Speaker 4: 47:51

I’ve got it here.

Dr James: 47:52

Smashing, absolute lifesaver. And the thing is you don’t. The way you link it up to your exchanges is via something called an API code. Okay, so if you put, if you put in the API code today, it retrospectively, it retrospectively tallies all your trades from this tax year, the previous tax year. It’s really good.

Speaker 4: 48:15

Thank you.

Dr James: 48:15

Save your headache, that save your headache, but they you know how you were saying earlier about the crystallizing into pounds, whether or not it only applies if you crystallize it into pounds versus other cryptos. They thought of that. The reason it would. It would be very, very easy to transfer your cryptos into tether, so like a stable coin for dollars, and then avoid tax altogether. You see, so that’s, I believe that’s part of the reason why they’ve likely accounted for that, but it’s just a, it’s just a. Yeah, that’s the reason why that’s in place. Does that all make sense? By the way, Tim Did that help.

Speaker 4: 48:54

Not that bit now.

Dr James: 48:56

Not the final bit. So tether being a stable coin because it’s a dollar back crypto, so for every tether, one tether is equal to one dollar. So, effectively, if you trade into tether, you’re trading for dollars. So you’re effectively trading for fiat.

Speaker 4: 49:17

Right, right, yeah, sorry, that means what?

Dr James: 49:25

So that means? So what I’m saying to you is what that would mean is it would be very easy to evade tax by doing that if it wasn’t accounted for by the fact that HMRC will. It’s a taxable event when you buy and trade into other cryptos, not just ponds. That’s what I’m saying.

Speaker 4: 49:43

Okay, cool. So let’s look at the recap thing, because I’m obviously still new in learning.

Dr James: 49:48

Yeah.

Speaker 4: 49:49

Yeah, I plan on earning 12,300 more a year, so I want to find the most tax-affiliated, efficient way of doing it.

Mike: 49:58

And for your wife, Tim, so you can double that.

Speaker 4: 50:01

And for your wife, so you want to double that figure, yeah, I will do, yeah, she’s going to be doing it as well. She’s actually got her own wallet. She’s got some money in it.

Dr James: 50:11

Brilliant, brilliant, brilliant.

Speaker 4: 50:12

Right, he just holls it.

Dr James: 50:16

So, mike, when you were saying we’ve got a few more questions, we’re going to chuck some more stuff out in just a minute, we’ve got some anonymous questions that have been sent in as well. Let’s say, let’s use the example of Tim’s wife, at what point would Tim’s wife on paper have to be trading Tim’s account? So say, we’ve got Tim’s account that’s registered under Tim’s name, okay, would for her, for them to gain their? Because my understanding would be that you can share your capital gains allowance and your wife’s capital gains allowance. You can pass, you can somehow transfer crypto to your spouse.

Mike: 50:58

You’ll do a better job of explaining to me yeah, yeah, yeah, you’re getting there with the terminology. You can’t. You can’t have two personal allowances myself, because my wife doesn’t have any. Okay, so that’s not possible. But what you can do between husband and wife and it is marriage that’s the important thing in this situation and you can transfer things between spouses at nil gain, nil loss, okay. So if I had a rental property that was had a gain of 200 grand on it and I wanted my wife to have half of it, I could transfer it to her and we would pay no tax on that transfer because we’re married. Okay, so essentially, it passes to your spouse at nil gain, nil loss. So if you were sitting there with 100Ks worth of crypto gains and you’ve really wanted the cash, for whatever reason, you would need to set up your spouse on the crypto platform that you’re trading on that, transfer her or him some some crypto asset, some crypto currency, and then get the them to sell it on the open market. Like I said, it’s very important you follow those, those processes to get it right. You can’t fudge it. Hmrc wouldn’t allow you to go. I’ve sold 100,000 pounds but half of it was my wife’s, doesn’t?

Dr James: 52:31

work Right. That’s brilliant, Tim. There’s another something you might want to take a look at what?

Speaker 4: 52:37

happens if it’s your partner. You’re not married, but it’s your partner. You’ve been living together for years and years.

Mike: 52:44

As far as I’m aware and I’d like to look it up to double check for anyone that wanted to rely on it but I don’t think it works. I think civil partnerships fine, marriage is fine, but long-term partner would just be treated as a third party and it’s like you’re gifting it to them, and gifting would mean it would be a triggering and perhaps a gain. Yeah, okay, okay.

Speaker 4: 53:07

Lovely Good information, Mike. Thank you.

Speaker 2: 53:09

Top stuff.

Speaker 4: 53:10

You know, your stuff, you know your stuff.

Dr James: 53:13

Mike does know his stuff. Mike’s a very knowledgeable kind of guy. Yeah, yeah, I was very impressed with Mike. I’m very, very happy to work with Mike and my one DWI Guys, anybody else got any questions? Fire away. Anybody from the Access to Bitcoin group got any questions. There’s someone on the chat. Yes, I saw some creep in. Let’s go ahead and look at those. I’ll read them out, shall I? Here we go. One from Amina. Thank you for the amazing information and amazing webinar. You’re most welcome, amina. I have one question If we were investing into crypto via limited companies and associate, would we lose the CGT tax allowance of £12,500? Mike already used that one. Does that make sense? It makes sense.

Mike: 54:00

Yeah, you’ve got to be aware of what’s going on with limited companies. The difference between personal investment and limited company investment is massive At the moment. Personal investment I get £12,300 of CGT allowance, which means I can make a gain of no more than £12,300 a year and pay no CGT. That remains, doesn’t matter if you’ve got limited company or not. That remains. If I invest in personal asset, in personal things in my own name, then that continues. If I’ve got a company and my company invests in crypto or another asset, the company does not have a personal asset. I still do, but I’m not using it because my company’s investing and that’s the choice that you’re making. Because you choose to invest via your company rather than via yourself, then your company will pay corporation tax on any income or gain that that trade makes At corporation tax rate 19%. In this example, if you’re looking at a dentist or another person that’s working out whether to look at limited companies or not, because of that £12,300 personal allowance, personal investment probably always going to be preferred for something like this. The reason people use limited companies to make their investments is because they don’t want to take the cash. They generate all their cash in their limited company. They don’t want to take their cash out of the limited company because that’s going to trigger them at a taxable event. That will be a dividend and they’ll pay tax on that at 32.5%. Some people start then investing via the limited company route, which isn’t as favourable, but if that’s the position you’re in, that’s sometimes your hand’s at force. So either you take cash out and invest personally and recognise that you’re going to pay a third of it away to HMRC before you do that, or you invest in the limited company.

Dr James: 56:05

Awesome, awesome, I mean. I hope that cleared things up. We actually what I’m going to do. I’m going to come back to the questions in the chat in just two seconds. It was a rather interesting question that somebody sent me and they sent me anonymously and it goes a little bit like this so this particular individual, the circumstances they find themselves in they set up a crypto account way back when and it was a personal account. Now, when you try to set up a corporate account or a business account on, let’s pick, a crypto exchange finance, and you already have a personal account, they won’t let you do that to my knowledge. So it’s very, very you can’t have both. They won’t let you, and the way they know it’s you is because obviously you have to send your passport in and your details. So what this particular individual wanted to know was would there be any issue legally if his wife was to set up a corporate account for their business which is 50% his, 50% theirs, and he traded it exclusively?

Mike: 57:12

The most important thing is that that profile has the company’s name on it, and if it has the company’s name on it, then it’s fine.

Dr James: 57:25

That’s totally legit, right, yeah, okay, yeah, because a company is its own legal entity Okay.

Mike: 57:32

So if I had a company? I appreciate finance may not allow this, but if I had a company I could invest personally. My company can invest, my wife can invest. That’s completely fine from HMRC’s viewpoint. Okay, so along the legal documents state that one wallet or one exchange, whatever it is, one profile is me, one is my company’s, one is my wife’s. So I went to the account. In Binance it says my grind for my personal, my grind limited for my company and then my wife’s for my wife’s. It’s all about the legal documentation that HMRC would look at.

Speaker 4: 58:14

Mike, can I just ask you another question? Right, bitcoin’s been around, obviously, for the number of years that has been, but what about all the scallywags in the world that use Bitcoin for trading this and trading that and don’t pay tax? Don’t pay this, don’t pay that? Do the companies that exchange, like Binance, submit all their records to HMRC, or Kraken submit all their records to HMRC? I mean, the question I’m asking is do they know? So why declare it if they don’t know?

Dr James: 58:51

No, they do know, they do know. When you register on Binance, if you want to deposit with a bank account, you have to go through KYC, you have to hand your passport.

Speaker 4: 58:59

Yeah, that little passport, driving license, all that stuff.

Dr James: 59:03

Yeah, then they know it’s any central. There’s two types of exchanges. There’s a centralized exchange and there’s a decentralized exchange. Okay, legally, because a centralized exchange handles fiat money, it has to know who you are.

Speaker 4: 59:18

Yeah.

Dr James: 59:19

So all those records of what you’ve traded is all assigned to your name, so it’s very easy to find if there’s been any discrepancy between what you’ve declared and what you’ve the games that you’ve made in that tax year. A decentralized exchange? Well, put it like they don’t. I don’t want to give any unsolicited advice, but they’re that much more unlikely to be able to find you because there’s nothing linking your public Bitcoin crypto address to your actual details, apart from, maybe, your IP address. But they really have to go digging. I don’t think. I don’t think HMRC even really know what a decentralized exchange is, Never mind going and digging through lines of code and software to find out what you own. But that’s not to say do that information what you please. Yeah, yeah.

Speaker 4: 1:00:12

I just want to understand why our things happen.

Mike: 1:00:15

With with banks. Tim banks obviously actually feed HMRC information. They will tell them if you earn interest on a bank account and you haven’t declared it. That’s why they can get some quite targeted inquiries into people in the UK tax returns. I don’t think the crypto world is that advanced at this moment in time. James is going to interject.

Dr James: 1:00:39

Coinbase sent out a letter from HMRC to all their customers about 12 months ago. So Coinbase is obviously one of the biggest, most established ones, so you might expect for HMRC to approach them first, but it certainly sets a precedent, does it that they might come after Binance? They will.

Mike: 1:01:04

They will because HMRC know that they don’t have the manpower to go for what they used to do, which was almost pick random people and see if there’s anything dodgy going on. They need to be more digital. There’s this thing called making tax digital. That’s coming in in the next few years. It was already here for VAT purposes. It’s coming in for income tax purposes. It will be more big brothers watching you. All this information will get fed to HMRC digitally and it needs to then agree it to your annual submissions by your tax return Cool, thanks for that.

Speaker 4: 1:01:39

No, that’s fine, Thank you.

Dr James: 1:01:41

I hope that helped him. There was a second part to what I was saying earlier and it’s just slipped my mind. What was it? Yes, we were talking about that anonymous individual and he wished to know if they set up that business account shared business account between him and his wife. Is that a problem? So we established that that’s not an issue. Would it change things, mike, if the business was solely owned by his wife, yet he traded the account? Is that an issue?

Mike: 1:02:13

Again, it’s all about the legal documents. So if I was a company and I owned the shares in this company it was a big company I might not work in this company. I might appoint directors just people that I pay to go to work for me. So the actual person that’s running this company’s wallet or trade is almost irrelevant. It’s the fact that the company is the registered individual. In order to get it registered, they’ll check shareholders. They’ll check directors. You’ll need to jump through that red tape, but once it’s set up, actually it’s pretty irrelevant who’s actually doing that trading.

Dr James: 1:02:51

Do you know? That’s so, so useful, because anybody out there. Quite often what happens is people start out their crypto journey with a personal account and then they realize somewhere down the line that it actually suits them better to have a corporate account or a business account, so to get your wife or someone you trust to own that or your wife, your husband, whatever, or someone you trust to own that and then for you to be able to trade a corporate account using the funds and that, and to know that that’s not an issue. That’s actually really valuable. So thank you for that. Cool, awesome, we’re learning a lot today, right, brilliant. We’ve got some more questions sneaking in. We’ve got one from Zivar. Thank you, mike. Could I ask what happens if you hold Bitcoin and don’t actually spend it? Is that a taxable event? Do you declare what asset you’ve purchased with Bitcoin? I think that’s the pregnant gains that you were talking about, wasn’t it Mike?

Mike: 1:03:40

No, sorry, James. I think he says actually spend it. So I think he’s talking about if you go and buy pizza with the Bitcoin.

Dr James: 1:03:48

Oh, sorry, sorry, mate. Yeah, I’ve completely misread that. Yeah, yeah, he said, as Zivar said, if you actually spend it, is that a taxable event. Do you declare that? What asset you’ve purchased with Bitcoin? Yep, there we go. Sorry about that, yeah.

Mike: 1:04:01

Basically, yeah, although you don’t declare that you bought a pizza or some dental treatment with that Bitcoin, you transfer you what’s the word I’m going to call. You have a deemed sterling amount. You use average rates on that particular day to work out what the sterling amount of that Bitcoin was, and that’s the figure that you use as sales proceeds in your calculation when you’re working at capital gains tax.

Dr James: 1:04:27

Awesome, kasim. I see you, my friend. You’ve been waiting really patiently with your hand up. How are you, buddy? What’s happening, james, how you doing? I’m tremendous, my brother. It’s good to see you. It’s been a while. Have you got a question that you’d like to ask, mike? I do.

Speaker 2: 1:04:41

I do. Yeah, I just wanted some clarification on crystallizing gains. Let’s say you throw Bitcoin for a profit and you incur a gain, and then you said you can buy another coin. Can you then use that coin to buy more Bitcoin? Or can you not buy that asset again for 30 days to avoid bed and breakfasting?

Mike: 1:05:02

So bed and breakfasting rules are on the same coin. So if you sold Bitcoin on a particular day and you bought Bitcoin at any point within the next 30 days, that’s when the bed and breakfasting rules would kick in. If you bought an altcoin, then that’s not bed and breakfast. If you bought an old coin and then transferred it to Bitcoin within 30 days of selling that Bitcoin, that would be bed and breakfast.

Speaker 2: 1:05:29

I see, Okay cool, I sort of figured that. But yeah, there’s no way out, I guess.

Mike: 1:05:34

No, they’ll catch you. That’s why they’ve got these rules. They’ve thought about it and this wasn’t around as a crypto. This was around because it stops and shares. It’s a trial and tested rule. It does actually work. So, yeah, they’ve thought about that, and quite hard, and they’ll catch you out. If you do go back into Bitcoin, unless you use your spouse’s account which is something we talked about in the presentation you could sell. Your spouse could rebuy at the same day. It doesn’t have to be a spouse, could be a friend, someone that’s allowing you to use their platform. Then that’s going to mitigate your risk.

Speaker 2: 1:06:07

Fair enough, cheers, mike. Thanks for your presentation.

Mike: 1:06:10

Now Ores Kassim Cheers.

Dr James: 1:06:12

You’re welcome, kassim. Good to see you, my friend Cool. We have another question from Amina. What happens when one is not married? I think I saw that question pop up at some point during the presentation. I’m assuming that refers to transferring the. What was the terminal? Yes, that was it. Did we clear that up earlier? Mike, you said that it only applies if you’ve got a civil partnership or you’re married, that you can take advantage of that. Is that correct?

Mike: 1:06:46

Yeah, again, I’m 95% correct about that. I’ve double checked with long-standing partners people that own the house together but I’m pretty sure it’s marriage or civil partnership.

Dr James: 1:06:57

Cool. Yeah, it’d be good to know that actually, because that’s going to be very relevant to Tim. I’d be interested to hear what you get back on that one. Yeah, I’ll put it on the group. Cool, Thank you for that. Lisa has said thanks, guys. You’re most welcome, lisa. Thanks for joining us today. Kevin, how are you, my friends? Kevin has got a great question. Is Kevin still here? Oh, he’s disappeared. Oh, okay, we’ve just missed him. Kevin’s asked if you were to buy speculative NFTs. How does that work? I would assume that NFTs for anybody who doesn’t know non-fundable tokens, generally little bits of art which are stored on the blockchain. I would assume that those fall under assets and therefore any profit over $12,300 would be liable with a capital gains tax. Mike, is that something that you know a little bit more about?

Mike: 1:07:44

Yeah, it’s the same as did you say that they’re essentially artwork or something like that, something you said.

Dr James: 1:07:49

Yeah, so there are little pieces of art that are well. The reason that they are well, they’re stored on the blockchain. So it’s just like if you own a crypto, except it’s a piece of art and it’s totally unique and you can store it in your wallet is the best way I can describe it.

Mike: 1:08:06

Yeah, non-fundable tokens they’re not pleasing to look at, then I assume it’s no, they can be they can be very aesthetic or they can be very unesthetic.

Dr James: 1:08:15

Some, lots of them have. They’re mainly memes and memes memes, however you like to say it. So they’re more amusing, I suppose, than actual beautiful Mona Lisa’s, etc. Rembrandt.

Mike: 1:08:31

It’s going to be the same as buying a crypto asset, essentially, and same CGT rules.

Dr James: 1:08:37

Cool, cool, cool, awesome, kevin, if you’re listening afterwards, hope that helped. And Amina has said thank you, you’re most welcome, amina, and Muhammad has jumped in. Muhammad, how are you, my friend? Thanks a lot for this webinar. James and Mike, you’re most welcome. Is it both Binance? Muhammad’s question is is it both Binance and Kraken that doesn’t allow having both a personal and a corporate account? Shall I answer that one, mike? Is that okay? Yeah, so, muhammad, in my experience that when you already have a personal account and when you’re asked to fill in your details to create a business account, they don’t tend to permit it in my experience. So I know for a fact it happens on Kraken first hand. I know from second hand accounts that it happens on Binance. So hopefully that answers your question. The short answer is yes, they both don’t allow it. I wonder if James.

Mike: 1:09:36

I assume one could have a personal account on Binance and one could have a limited company account on Kraken.

Dr James: 1:09:45

Yeah, totally yeah. Yeah, separate entities, mix and match. Just the issue is that they won’t let you have both on any one exchange. Yeah, and then are there any other? So the second part of Muhammad’s question Tim, I see you’re coming in a second the second part of Muhammad’s question is are there any other exchanges that allow both Muhammad? Not that I know of. If you can find any, I’d be very interested to know, but not in my experience. Tim, you’ve got another question far away.

Speaker 4: 1:10:17

Yeah, coming back to the asset question, about getting up to games and assets, if I bought a car for £1,000 and sold it for £1,500, would I be liable for that £500 game? No, you’re getting technical. Tim, I’m just trying to be sort of…. Yeah, a car.

Mike: 1:10:36

No, no, no, it’s a fair question. Yeah, what?

Speaker 4: 1:10:38

asset do you buy? No sure. Well some assets, yes, some assets.

Mike: 1:10:42

No. So a car is something we call a wasting chattel. That means it’s got a life of under 50 years and would be exempt from CGT purposes.

Speaker 4: 1:10:52

Oh, ok, I didn’t know.

Mike: 1:10:54

But artwork, for example, maybe whiskey? Good question, maybe. So there are certain things out there that would avoid CGT if you’re clever at playing the game.

Dr James: 1:11:08

Hmm, so we can flip as many cars as we like and we pay no tax?

Speaker 4: 1:11:12

Yeah, apart from if it was a source of income.

Dr James: 1:11:15

I’m guessing Well.

Speaker 4: 1:11:17

I know for a fact that’s what Chris Evans does. Right, he’ll buy a Ferrari for £5,000 and sell it for £7,000, right, you know, doesn’t pay any tax.

Speaker 2: 1:11:28

Hmm.

Speaker 4: 1:11:29

Not that I’m going to get in a car business, but down a road in a car, though I don’t know, it’s a good question.

Mike: 1:11:37

But James said, if it’s an actual business, so like if you’re flipping houses, you flip one house, that’s capital gains. You flip multiple houses an income you’re going to income tax. If you’re Chris Evans and you do that one car, that CGT might get away with it. If you do multiple cars, then it’s income tax and you should be paying 20 or 40 or 40.

Speaker 4: 1:11:56

I don’t know what he does, but I mean, that’s just. I know that he buys lots of different.

Mike: 1:12:01

There’s CGT rules when you get into different assets.

Speaker 4: 1:12:04

There’s many rules out there, but yeah, cars would be exempt, just trying to sort of swerve around the corner, if that makes sense.

Dr James: 1:12:12

Yeah, I like that. I like that analogy Very good, very good, awesome. Thanks, tim Cool.

Speaker 4: 1:12:17

Thank you. Thank you, Mike Brilliant.

Dr James: 1:12:20

Cool, cool, cool, cool, cool. Right, Zivar has got one. Fine, I think we’re running out of time here a little bit. Does anyone out? Gregor, do you have any questions? I just saw you looking a bit animated there. I thought you might have had your hand up. All good I was scratching my face. Oh, I see, I see, I just caught you out of the corner of my eye.

Speaker 2: 1:12:40

I take up my fees that I pay on trades, that would be tax deductible then? Yeah, yeah, and any cost If I was to use software like that recap. Does that automatically calculate it for you? Yeah, okay, perfect Cheers.

Mike: 1:12:56

That’s why we can’t Sorry, mike, I was going to say, interestingly, the costs of recap, if you have to pay for it, wouldn’t be tax deductible, because that isn’t a cost to buy or sell crypto, it is a cost of generating a tax report. So you wouldn’t get tax relief from the software costs. For recap, Hmm, hmm.

Dr James: 1:13:16

But don’t you get tax relief on what your accountant charges you as a dentist? Yeah, because that’s income, it’s not capital gains. Oh, nuance, the nuance is insane. That’s interesting. Okay, thanks for that, cool Right, I’m learning those today, by the way. This is brilliant, cool Right. We have one question that’s snuck in here at the final whistle. Zevar has asked the hypothetical question what if we buy the Ferrari with BTC and then flip it? That’s right, we’ve officially got lost at that point. Yeah, who knows? Who knows? Capital gains tax maybe?

Mike: 1:13:53

Yeah, you could I don’t know set up a charity in Asia and then siphon the money off over there and then bring it back by the Virgin Islands, and you probably wouldn’t pay any tax.

Dr James: 1:14:02

Yeah, there we go. There is a nice clear, concise answer for you, zevar. I hope that helped my friend. Awesome, right, cool, I have. Oh wait, I mean as a Mohamed’s captain with another question here, sorry. Also, does recapio take into account the bread and breakfast rules? That’s a brilliant question, mohamed, I Do. We think that’s likely, Mike, given that is bread and breakfast. A little complex, isn’t it? Yeah?

Mike: 1:14:30

It should, because it should look at any purchases within 30 days of selling something, if it’s doing its job properly. I haven’t used Recap. If it was me, I would test it and see what it spits out, but I haven’t tested it.

Dr James: 1:14:49

Okay, cool, yeah, sorry, we’re a little uncertain on that one, mohamed, might be one that you’d like to look into yourself and get back to us, because we’re learning as well, because the thing about taxes it’s so nuanced it really is, and crypto is something that’s very much at the pinnacle of advancing technology. So quite often the HMRC don’t even have clear answers on these sorts of things as well, but Mike’s done a tremendous, tremendous, tremendous job of explaining that today. I actually don’t think that there is a definitive resource on where, on how crypto is related to tax, genuinely speaking. So I think Mike’s done a really, really brilliant job of explaining that to all of us. I’ve learned loads. Thank you for that, mike. Another great presentation. I hope that everybody has enjoyed that today. We are going to draw a line under that now. If that’s good with you, mike, unless anybody’s got some very, very, very final questions that they’d like to slip in, we’ll give you five seconds, grace. You’re welcome. Tim, my friend. Thank you for coming. I think we’re all good. I think that’s a wrap, mike. Thank you so much for coming. Thanks, o, double thumbs up, cool, awesome to see everybody. I hope everybody has a tremendous Sunday evening. We’re going to wrap up now and I’ll see you all later. Goodbye, thanks guys. Thank you.