I am trying to understand the tax implication (taking into account UK cost basis and Bed/Breakfast Rules)
Here is the example I am trying to understand
I bought 10 ETH at price of £1700 per ETH (total £17K)
Sometime later (more than 30 days) ETH price is £2000 per ETH (total £20K).
I swap from ETH to BTC (imagine this means I got a full BTC for simplicity). This is a taxable event and it would mean I have £3000 Capital Gain which is subject to CG rules, as far as I know.
Less than 30 days, I swap one BTC back to ETH but at this swap I got 11 ETH instead of 10.
Does this mean I will be taxed on both swaps or it means I just bought 11 ETH with £17000? or it means the extra ETH I got will be considered a gain and I will need to pay tax for its price at the time of the swap?
no it doesn’t mean you just bought 11 ETH with £17000
The answer to your question would depends on what BTC was worth when you swap the 1 BTC to 11 ETH? If you assumed the BTC was still worth £20000 when swapped for 11 ETH (£1818.18 each).
assumed following transactions:
Buy/Sell
Date
Coin
Qty
Price
B
10-Apr-21
ETH
10
1700.0000000
S
20-May-21
ETH
10
2000.0000000
B
20-May-21
BTC
1
20000.0000000
S
30-May-21
BTC
1
20000.0000000
B
30-May-21
ETH
11
1818.1800000
Capital gains calculation is below;
TAX_YEAR 21-22
SELL: 10 ETH on 20/05/2021 at £2000.00 gives GAIN of £1,818.20
Matches with:
BUY: 30/05/2021 10 ETH shares of 11 bought at £1818.18
CALCULATION: Gain = £1,818.20 = ( 10 * 2000.00 - 0.00 )
( 11 * 1818.18 + 0.00 + 0.00 ) * ( 10 / 11 )
SELL: 1 BTC on 30/05/2021 at £20000.00 gives GAIN of £0.00
Matches with:
BUY: SECTION 104 HOLDING. 1 BTC shares of 1 bought at average price of £20000.00
CALCULATION: Gain = £0.00 = ( 1 * 20000.00 - 0.00 )
( 1 * 20000.00 )
CURRENT PORTFOLIO
ETH 11
Total number of trades = 5
Total number of buys = 3
Total number of sells = 2