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This episode is actually based on a question that was submitted to me by someone who looked at enrolling in my DeFi Masterclass, so I thought I’d break this out into a fuller explanation.
Let’s take an up to date example based on my direct experience.
In March of 2021 I decided to do a Michael Saylor and take some of the spare cash I had and put it into crypto.
Michael Saylor does this with his company Microstrategy, and he does it exclusively with Bitcoin.
I decided that I would take a bit more risk and put the cash into Ethereum.
Now we can debate whether Ethereum is in fact a higher risk investment than Bitcoin in another episode, suffice to say that I thought so at the time.
Turns out that was a good decision because between the 1st of March 2021 and the time I’m recording this, Bitcoin was only up 3.6%.
In that same time period, Ethereum is up 168%.
So my investment is worth about 2.5 times what it was when I started.
Right off the bat there I have a capital gain.
I could now sell that investment, subtract the tax free allowance we get in the UK and then pay the capital gains tax on the difference.
So let’s put some hard numbers on that.
In the UK, each year, we are allowed to make the first £12,300 of capital gains tax free.
Then anything in excess of that incurs capital gains tax of 20%.
Now I’m not an accountant so this is to the best of my knowledge and should not be taken as professional advice, because it isn’t.
So far this is all pretty straightforward, the next part is where it gets a bit more complex.
So I have option 1 as I’ve just laid out, which is to sell my investment, pay the tax and call it a day.
But I haven’t actually done that yet.
Instead I am thinking about putting the Ethereum I bought on deposit with a platform like Nexo.
If I’m willing to lock up the Ethereum for 1 month at a time they’ll pay me 8%.
Bear in mind the inter..
