Crypto bought on the behalf of a friend

Tax Questions
#1

Hi,

A friend sent me FIAT to purchase BTC, which I immediately sent to his wallet after I purchased it (this was a one off as he did not have access to an exchange at the time). I am considering how this should be logged in Koinly?

Should I:

  • Leave it as a withdrawal, in which case I would incur the capital gains/ losses at the moment of withdrawal? I would actually benefit from the capital loss in my case, but this wouldn’t be correct as I would benefiting from CGT tax relief and I did not pay for this transaction.

  • Set it as a GIFT? But I understand under UK CGT laws this is also subject to CGT as he is a friend?

  • Delete the transactions from my history altogether?

Also would any of the above options affect how my friend would declare is tax? He would obviously want to use the amount he paid to offset his tax.

I would appreciate your help on this matter thanks.

#2

Hey @ACE

Thanks for reaching out. :wave:t2:

Unfortunately, we aren’t able to give tax advice so ultimately it’s your decision how you want to treat the BTC.

I’d recommend getting in touch with HMRC or a qualified CPA for a definitive answer. :+1:t2:

#3

Hi there, Don’t take this as financial advice, please keep in mind the relevant rules etc but in general,

  1. I think your argument in point 1 makes sense in that it would be wrong to claim any cap gains losses against other profits you may have had on similar transactions.

  2. I wouldn’t consider this to be your transaction provided this was not your fiat-crypto exchange. Your friend should add this in and out to his own tax declaration. In general always better to have ones own set of transactions in and out of ones own exchanges etc but you obv know this.

There are cap gains allowances you can claim against overall gains if it’s in a gain position. See here - Capital Gains Tax: what you pay it on, rates and allowances: Capital Gains Tax allowances - GOV.UK

This link here might be useful too, Check if you need to pay tax when you sell cryptoassets - GOV.UK

We are unsure of the value that has changed hands here so that could have some effect, if it’s small like less than £500 I’d imagine it’s not such a big issue but the larger the tx value the more detailed your accounting records need to be. If HMRC ever questions this, you should have a record of the transactions and conversations with your friend to point out this was not your tx rather it was done on behalf of someone else.

#4

Thank you for your response. I sent the coins immediately after buying them so the capital loss was small, and I won’t be submitting a tax report this financial year as I am below the threshold and I am holding my assets for the time being, so in this case I guess leaving the transaction as a withdrawal will not have any impact for me.