No more VAT on bitcoin transactions

The British government has decided to stop charging tax on bitcoin transactions. Great news - shame its value has plummeted.

by Emma Haslett
Last Updated: 05 Mar 2014

The British government may be lambasted for its old-fashioned, bureaucratic approach to, well, pretty much everything – but on one issue, at least, it stands ahead of its rivals: bitcoin.

Yep, the UK has suddenly decided to take an enlightened approach to the controversial cryptocurrency, which has had more twists and turns than an Eastenders plotline over the past few days after one of its main exchanges went into administration. HMRC announced this morning it is going to stop charging VAT on transactions using the currency. Shame its value has halved since December. Better late than never, we suppose…

Presumably, this is because the government wants a slice of the Bitcoin pie: if the likes of MtGox can't handle it properly, us Brits should be able to handle it. It certainly sets HMRC apart from rivals like China (which has banned its banks from handling bitcoin), Thailand and Vietnam – and potentially even the US, where a senior senator is trying to get the currency banned. It’s rather forward-thinking, actually – although the currency’s recent volatility suggests it is best left alone by all by the most foolhardy of investors.

Still, HMRC said it will be ‘issuing technical guidance shortly’: ‘HMRC has been working closely with the bitcoin industry on the tax treatment of trading in bitcoins and commission,’ it said today.

Unfortunately, the currency’s general unreliability mean its prospects as an actual, useful currency are rather slim. You never know, though: with the speed things change in the world of bitcoin, by next Tuesday we could all be using it.

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