Not to rain on the fun now with the 4

year staking, but how are people from the uk approaching the tax implications of staking if it is locked up for 4 years, as last year i has to pay tax on everything i has earned from staking whether i has cashed those rewards or not. If say for example albt goes to the moon over the next 4 years, and im earning juicy staking rewards, the tax man is gonna want a piece of that pie! How are uk people approaching this issue??

Hey I'm from the UK as well, my understanding is that at the end of the 4 years we will be charged income tax rate on the amount we earned through staking, is that correct? So if I earn 10K albt through staking, almost half will need to be liquidated to go to the tax man

taxman will not know mate , the mintue u put it in your bank account

This is true for Australia. You pay income tax upon receipt of tokens and then CGT if you don't sell right away.

You do. I thought that but the uk gov treats staking rewards like interest on your bank accounts. If you are completing your tax returns, you have to declare it

My understanding is that income tax will become due only when we can access the tokens, at the end of the 4 years - https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual/crypto21200

In Australia it's when the tokens are received I think. It doesn't sound right what you're saying, a gov can't expect you to pay tax on something when there is no actual reward paid yet.

That is helpful, thanks! 🙌

Jon
Looking at it again, that highlights the issue im...

Like it says at the time of receipt, if we only receive at the end of 4 years, won't the tax only be due on the value of the tokens then? Even if we earned in the interim, if we could not access them then I don't think their value at that point is taxable

So potentially i could lock up 20000 with approx 5000 each year earnt in compounding interest. When i complete my tax return next year, the uk govt would want me to pay income tax on the 5000 i have earnt, cashed or not, and on every 5000 for the next 3 years until unlocked. And when i cash out my 40000 albt they will want captial gains on top of that too

You do friend. Read it closely. Anything you receive each year will be classed as income and you pay tax on that. When you then cash out you get the joy of being taxed for captial gains. I know as this is what i had to do last year

Your tokens are in a 4 year contract payable at the end of 4 years. Say you had a rental where you earn $1000 per week but it's only payable at the end of the 4 year rental term. You only pay tax at the end of 4 years.

But like the 5000 you earn't you could not access it at the time, so how can they charge tax on it? Like I get that at the end of 4 years if we receive 10 K additional tokens then that will have to be reported in that tax year as income earned in that year, so you will be taxed on the value of 10K in that year when you received it, not when you earned it in previous years when u couldn't access it

Yes if you receive it but with this 4 yr campaign we don't receive anything until the contract is finished in 4 yrs.

Aye, but think about it, that interest is compounding and working for you each year, so it would be difficult to say "no Mr tax man i only received it at the end of 4 years" when quite clearly it was compounded and working to earn you more in the years prior

But like how will they know it was compounded, we will receive it in year 4 and can just state it as staking income for that year, no? and even if they did know it was compounded we could not access it at the time so I don't think it can even be classed as income before the end of 4 years, only when we receive it is it income for that year

Jon
This is screenshot of tax report i completed last ...

yes but in this case, i don't think it needs to be reported as staking income for that year, only in year 5 will we need to report it when we actually received it, until then we did not get it so it is not really income

Jon
This is screenshot of tax report i completed last ...

What if you live in a more friendly crypto country? Let's say Portugal ? There is no tax on crypto I think you could buy a house near a beach and profit. :)

move to dubai within 4 years and cash out end of story

Sounds like you might need to move to a crypto friendly country in 4 years 😉

+

https://www.cointracker.io/blog/cryptocurrency-taxation-in-the-united-kingdom#:~:text=General%20HMRC%20rules%20on%20crypto%20taxation&text=If%20you%20hold%20cryptocurrency%20as,a%20purchase%2C%20etc.).

Jon
Its not just a us /irs thing. This is presented i...

how will they know if i don’t report ?

“In your wallet” is the key phrase here

Risky. Say you made $1m from your staking in albt. You would have to declare it. They will next want to know where you got this extra albt from and you will have to produce records for this, to distinguish from the ones you bought and the ones you received which they will be interested in both in terms of income tax and in terms of captial gains.

Aye, but you are staking from your wallet aren't you and the albt is compounded and earning as part of that wallet even if you can't touch it, or am i mistaken there?

Yep that's what I'm saying - "At the time you received these coins in your wallet, each coin was worth £1.", we will be liable for tax when we actually receive them in our wallet in 4 years for however much they are worth at the time we receive them, if their locked in a 4 year staking contract then we have not "received" them.

like if u have staked and you check your wallet right now, it will say 0 ALBT, even though you have staked x and are have already earned y, there is nothing showing that you can access that albt

But how can we say we haven't received them when it is compounding and earning additional interest? Where is the staking rewards stored? In a separate wallet? Im not trying to be difficult or anything as i really want to stake but i want to be absolutely clear on the tax implications before i do, as the amount i could stake could mean im owing a hell of a lot in tax if albt moons and i want to be clear on when and what point I'm due to pay it

But what will it say tomorrow?

Because you cannot sell the staking rewards right now even if you wanted to, if you could then yes you would be liable for tax, but we have no access for the next 4 years, I'm not a tax expert, but looking at IRS at Australian guidelines, and also making sense of the UK guidelines this is the logical conclusion. It does not make sense to incur tax on "income" that you have not received, when you receive it you will also pay tax on the compounded staking returns as they are valued at the time you can access them in 4 years time. I would recommend a crypto focused accountant to get clarity on this, I will be doing the same in the future.

Can you guys take the tax topic to PM?

You work Monday You work Tuesday Do you owe tax on those two days of work that you’ve already earned? No, only when you get your salary. You can’t owe tax on money that hasn’t been paid to you yet.

No worries, but can you give clarity as to how the staking rewards are received and what shows in your wallet on a daily basis even if you cannot access them?

Staking reward will not show up in your wallet, it's an autocompounding pool so it will restake your reward back into the contract.

Thank you