Starting DeFi USDT mining with a loan

[liamf91]

Hey everyone,

First time using this, and at the moment its mainly for research

I am looking at starting mining in DeFi to increase the amount of USDT I have. Unfortunately I do not have any USDT to start this.

I have been looking at using a loan from my bank if it is accepted to be able to pull back enough rewards to repay the loan back within the 1st month (subject to the T&Cs of the loan).

I have a few questions around this:

1. If I use the loan of £25000 GBP to purchase the equivalent in USDT, put it all into mining to receive the rewards (calculated to double my USDT in around 23 days). Would I be able to pay back the loan (and only that amount being transferred to my bank account, the amount of GBP I paid to purchase the USDT) without needing to pay out in Tax in the UK?

2. If I don’t need to pay any tax, do I still need to do a self tax assessment form for the year?

Sorry for being so vague on my questions, I am new to this, but I really would like to make this work.

[Ali_Koinly]

@liamf91 I wish we had more tax experts on the forums to assist with this!

Unfortuantely I am not a UK tax expert, and you may be hard pressed to find an answer here. Have you tried speaking with an accountant in the UK about this?

@Mark_DesLauriers any input from you on this buddy?

[Mark_DesLauriers]

Sorry, I have been offline for a couple of weeks. I saw this question when it was posted but it wasn’t clear to me what crypto transactions were contemplated.

It apears that @liamf91 is initially looking to purchase USDT with £25000 in loan proceeds and then to “invest” the USDT in “mining” activities to generate rewards. The USDT proceeds of the mining activity will be used to repay the loan. Presumably this will require a sale of some of the USDT which will result in a capital gain or capital loss for UK tax purposes (Koinly will calculate this). The mining rewards should presumably be tagged as Income in Koinly which will be subject to UK income tax. Given that a gain is expected from this venture, I would expect that some UK taxes will be payable. This will require a self-assessment return filing for the relevant year. This analysis assumes that the mining activity is not such as to constitute “an adventure in the nature of trade” which would generate business income rather than invetsment income, and possibly have different tax consequences.

Hope this helps.