So I’m thinking that I earn a little bit of hive here and there, who cares?
Apparently the tax man…
Obviously I know this, the only things certain in life are death and taxes. But what really is the situation for me? I’m not making millions, in fact, im not making thousands but perhaps i should check in case i hit upon the next memecoin and make it big.
His Majesty's Revenue and Customs (HMRC) have some nice guidelines that we should all adhere to, a real interesting read. HMRC classifies cryptocurrencies and NFT assets as property, not currency, for tax purposes. This distinction influences how gains, income, and transactions involving crypto are taxed.
Taxation for individuals
Maybe surprisingly everything I receive on Hive is taxable and subject to Income Tax:
- Payment for goods or services.
- Mining rewards.
- Staking rewards.
- Airdrops (provided they are received as part of an activity, such as a promotion).
This is taxed on the value at the time of receipt.
Then I get to pay tax on the asset if I manage to make a profit, ok we get an annual allowance so we can take a little profit every tax year, in the form of Capital Gains Tax. Transactions that attract CGT are
- Sale crypto assets for fiat currency.
- Exchange of one cryptocurrency for another.
- Use of crypto assets to pay for goods or services.
- Gift of crypto assets to someone (excluding a spouse or civil partner).
Record Keeping
This is where it starts to get difficult for me, and probably many when it comes to hive, record keeping. HMRC requires individuals to maintain detailed records of all crypto transactions. This includes dates, amounts, the value in pounds sterling at the time of the transaction, and associated costs.
So firstly I need to have logged all my transactions, then I have to have converted this transaction to sterling, then I need to work out if its income.
Looks like I need to do a bit more research…
Luckily @steevc pointed me in the direction of a script from @pharesim that gets a csv of Hive transactions so I have a start, now just to convert them all into sterling and check what costs I should be using to calculate any gains, any body have any ideas?
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