Foreign currency balances and digital assets represent independent assets according to the
applicable legal status. Accordingly, a sale can lead to a taxable capital gain.
The exchange of assets is equal to a sale. The proceeds of the sale in this case result from the
market value of the incoming asset.
The taxable gain is the difference between acquisition cost and disposal proceeds less expenses.
For this purpose, both the acquisition costs and the proceeds from the sale are to be converted
into pounds at the time of inflow and outflow.
In analogous application of the tax rules governing the sale of shares, the calculation of taxable
income is based on three different consumption tracking methods. These are taken into account
in descending order as follows: (i) consumption of assets purchased on the same day (same day
rule), (ii) consumption of assets acquired within 30 day of the sale (bed and breakfast rule) and
(iii) application of the average cost method.
The sum of all taxable proceeds - exceeding the annual tax-free allowance for individuals asset
gains in the amount of 11,300 pounds for 2017 - represents the taxable gain.