Best Bitcoin Brokers in the UK

Fortunately, Bitcoin trading in the UK is absolutely legal. All you need is a trustworthy broker and the minimum amount of trading required. The minimum deposit and trading amount varies enormously depending on the type of platform.

However, since January 2021 it is prohibited for UK retailers to trade cryptocurrencies in the form of derivatives. Therefore, UK citizens can either not register at certain crypto trading platforms at all, or only use certain areas (spot markets). Read more on the FDA website.

Basically we have to distinguish between 2 types of Bitcoin Brokers.

"Real" Bitcoin Brokers

The first are the ones we call "real" Bitcoin brokers. By that we mean brokers to whom you send real BTCs and also get real BTCs paid out again. Of course you trade the Bitcoin price against GBP (or EUR, USD, depending on your needs). There are Bitcoin brokers where you can only pay out BTC again, so there you only trade price differences of the BTC against GBP. With other Bitcoin Brokers, a GBP profit can also be paid out, but this requires customer verification, which is not the case with pure BTC transactions. Only in the case of fiat money transactions (deposits or withdrawals) are brokers obliged to verify the identity of their customers.

Forex Brokers with Bitcoin Trading

The 2nd general group of Bitcoin brokers are those we call "not real" because they do not allow Bitcoin payouts. These are usually large international regulated forex brokers or CFD brokers. They only trade price differences based on the fiat currency paid in, such as GBP in the UK.

Here it is therefore opposite to the group of "real" Bitcoin brokers. With the latter, BTC is paid in, price differences are traded in long and short trades in order to cash out BTC again. In the other case, British pounds are paid in, the BTC price difference is traded in order to cash out GBP again. With such Forex or CFD brokers you always have to verify yourself completely before you are allowed to trade at all.

However, there are now also forex brokers who accept Bitcoin deposits and withdrawals. The borders are a bit blurred. A striking difference, however, remains the issue of ID verification, which is only ever necessary for forex brokers. On the other hand, there are much more deposit options, such as bank transfer, credit card, Paypal, Skrill or others.

Depending on your requirements and objectives, you have to choose the right type of broker.

UK Tax Directive For Bitcoin & Co.

Regarding tax on cryptocurrencies there is a guideline called "Cryptoassets for Individuals" published by the UK Government in December 2018. It provides guidance on what people should pay attention to when taxing Bitcoin and other cryptocurrencies.

Tax on Holding Bitcoin in the UK

As the guidelines show the government believes that most individuals hold Bitcoin & Co. to make a profit. Ultimately, the capital gains tax will be levied first.

Income tax and insurance contributions would be payable accordingly in case people also mined cryptocurrencies or received Bitcoin from their employer for certain services.

Tax on Trading Bitcoin in the UK

Bitcoin trading regulation are based on securities: When Bitcoin & Co. get traded, the legislation is based on the existing regulations on securities. This means that according to the governmental guidelines for crypto taxation a trade with crypto assets is to be classified similarly as a trade with shares, securities and other financial products.

Therefore, the approach to determining whether or not trading is conducted would be similar. The existing case law on trading in shares and securities can be used as a guide".

Ultimately, however, it has to be decided on a case-by-case basis, as the authority cannot automatically assume that it is "trading" in the strict sense. This is not the case, for example, if one cryptocurrency is exchanged for another.

In addition, however, it is also possible to assert losses in trading in the tax return by drawing up a corresponding cost accounting.

Loss of Private Keys

The Authority also recognizes that everyone is responsible for their own private keys. Nevertheless, in the event of a loss, this can be claimed from the authority:

If you should lose your private keys you have no more access to the crypto asset, never again. The private key then still exists as part of the cryptography, but is no longer known to you. The crypto assets also remain in the respective distributed ledger. This means that the loss of the key is not considered a sale in the sense of capital gains tax."