Readers' forum: Bitcoin

I have a number of clients who have invested in bitcoin. Some of them are doing this regularly and some are simply dipping their toes in the water by making a single purchase. I find it quite difficult to understand exactly what cryptocurrencies are all about and I suspect that some of my clients who have invested haven’t really understood either. Given the volatility in prices some have made good profits but some have substantial losses. Others are sitting on bitcoin holdings that are now worth very little compared with what they cost.

Unsurprisingly those who have made gains have suggested that what they are doing is simply betting on price fluctuations and therefore the profits are non-taxable. Those who have made losses are trying to argue that that they traded in bitcoin and should have the losses allowed against other income. Those who are sitting on unrealised...