The United Kingdom is amongst the leading cryptocurrency countries in the world. The region houses several cryptocurrency companies, which makes it easy to access crypto services. This means that it is easy to buy Bitcoin in the UK. Despite the availability of crypto exchanges and brokers, some people might find it challenging to buy Bitcoin in the UK. This post addresses the issue of buying BTC in the UK and how you can do it the right way.
Table of Contents
Buying Bitcoin in the UK From Exchanges
Legislation
Before we talk about the best places to buy Bitcoin in the UK, we have to look at the regulatory stance towards cryptocurrencies in the country. Currently, the UK has no specific cryptocurrency laws, and cryptocurrencies are not considered legal tender in the country. As such, crypto exchanges have registration requirements they need to fulfil before they can operate in the region.
Digital currency exchanges in the UK are required to register with the Financial Conduct Authority (FCA). However, some cryptocurrency businesses can obtain an e-license and operate with it. Although there is no special provision for crypto exchanges at the moment, FCA guidance stresses that companies providing crypto-related activities that fall under the current financial regulations for derivatives (like futures and options) have to be authorized before they can operate. The FCA regulations are followed to the letter by crypto exchanges to ensure that vices, such as money laundering and other fraudulent activities, are curbed within the cryptocurrency sector.
Kraken
Kraken is one of the oldest cryptocurrency exchanges in the world. Founded in 2011, Kraken is a San Francisco-based platform that makes it easy to buy Bitcoin in the UK. Although not a regulated platform, Kraken is registered as a Money Services Business (MSB), allowing it to offer financial services to clients in the U.S and other parts of the world.
| Pros | Cons |
| Secure platform | The site holds keys to your crypto address or your account |
| Easy to use platform | Slow account verification |
| Supports Bitcoin and hundreds of other cryptos | Unresponsive customer support |
| Cheap deposits and withdrawals |
Coinbase
Coinbase is another San Francisco cryptocurrency exchange that allows you to buy Bitcoin in the UK. The cryptocurrency company is one of the leading digital currency exchanges in the world, allowing people to access a wide range of leading cryptocurrencies. Coinbase is required to adhere to many financial services and consumer protection laws, including The Bank Secrecy Act.
| Pros | Cons |
| High liquidity | Limited payment options |
| Easy way to buy Bitcoin and other cryptos | |
| Regulated platform |
CoinJar
CoinJar is a leading cryptocurrency exchange that has been around since 2013. It is registered as a cryptocurrency exchange with AUSTRAC and is a registered business in the UK. It allows you to buy Bitcoin in the UK with ease together with other cryptocurrencies. In addition to this, CoinJar allows users to receive and send payments to external accounts, while they can also withdraw and spend their cryptos with ease. At the moment, CoinJar is not a regulated crypto exchange.
| Pros | Cons |
| Flat 1% fee | A limited selection of cryptocurrencies |
| Simple to use | Pricing is based on the spreads |
| It has multiple features like wallets and exchange |
LocalBitcoins
This is a Finnish online peer-to-peer cryptocurrency exchange that allows you to buy Bitcoin in the UK. The platform does this by pairing you with sellers from the UK and other parts of the world. You negotiate with the sellers and buy Bitcoin using any form of payment you are comfortable with. Localbitcoins complies with the Act on Virtual Currency Service Providers put in place by the Finnish government.
| Pros | Cons |
| Low fees | Higher fees for cash |
| Escrow service | Bid/Offer spread can be very wide in illiquid markets |
| Simple user interface | |
| Various payment options |
BitBargain
This is a UK-based marketplace that allows you to sell and buy Bitcoin using the British pound (GBP). BitBargain is described as a marketplace that connects buyers with trusted sellers, allowing people to get Bitcoin. It is an unregulated platform, but it complies with policies designed to protect the financial markets
| Pros | Cons |
| Supports transactions in fiat currencies | The buyer usually pays a premium |
| Easy and fast to use | |
| Choose your broker from the recommended list |
BitPanda
Bitpanda, formerly known as Coinimal, is a fintech company based in Vienna, Austria. Bitpanda is a well-known exchange and an excellent way to buy Bitcoin in the UK and EU. This exchange also supports Ethereum, Litecoin, and Dash and they also accept fiat payments. The platform has some helpful features and is easy to use and to navigate.
| Pros | Cons |
| Various payment options | Not available globally |
| Low transaction fees | |
| UI is friendly for beginners |
Buying Bitcoin in the UK From Brokers
Cryptocurrency brokers have sprung up over the past few years to offer alternative ways to buy, sell, and invest in cryptocurrencies. They have made it easier and cheaper to buy Bitcoin in the UK. While crypto exchanges focus on selling the physical BTC and other coins, brokers allow you to speculate on the prices of the assets when you trade them on their platforms. This is because brokers offer Bitcoin CFDs or contracts for differences trading. In this form of trading, you only predict the directional price movement of a cryptocurrency. With brokers, you can make money even when the price of BTC or any other cryptocurrency declines.
The introduction of brokers in the crypto space has made it easier to buy Bitcoin. Traders and investors do not need to worry about spending a fortune on crypto wallets to save their BTC coins since the brokers provide them access to trading platforms where they can trade digital assets. With this, traders only focus on investing and speculating on the price of Bitcoin and the other digital currencies when trading with online brokers.
IG Markets
IG Markets is one of the top CFD brokers in the world, with billions of dollars transacted annually. This broker allows people to trade Bitcoin in the UK. They can invest in Bitcoin and a host of other financial instruments like CFDs, Forex, commodities, and more. I.G. Markets is regulated by the FCA in the UK.
| Pros | Cons |
| Allows users to trade Bitcoin using fiat | Charge an inactivity fee |
| Low indices trading fees | High stock trading fees |
| Supports BTC trading | |
| No withdrawal fees |
READ THE FULL IG MARKETS REVIEW HERE
Pepperstone
Pepperstone is one of the leading brokers in Australia. The broker offers CFD cryptocurrency trading services to people in the U.K, Australia, and several other countries around the world. Pepperstone provides access to more than 150 assets, including Forex, index, share, commodities, cryptocurrencies, and currency index CFDs. It is regulated by the ASIC.
| Pros | Cons |
| Supports Bitcoin trading | Offers basic news analysis |
| Has low forex and indices fees | Zero investor protection for non-EU clients |
| Free deposits and withdrawal s |
READ THE FULL PEPPERSTONE REVIEW HERE
Mentor FX
Mentor FX is a leading broker that allows people in the UK to buy Bitcoin. The platform offers access to various financial markets, including Forex, stock CFDs, ETFs, and more. At the moment, Mentor FX has a certificate of incorporation from Saint Vincent and the Grenadines, allowing it to provide its services to traders based in Europe. The broker offers an intuitive trading platform making it easy even for beginners to trade Bitcoin.
| Pros | Cons |
| Offers leverage as high as 1:500 | Poor customer support |
| Advanced tools and charts | |
| Fast order execution | |
| Negative balance protection |
READ THE FULL MENTOR FX REVIEW HERE
EuropeFX
This is a top broker founded in 2013 that allows people in the UK and all over the world to buy Bitcoin and a wide range of other cryptocurrencies. EuropeFX offers access to hundreds of financial assets and they provide numerous tools and features to make the trading process easier. EuropeFX is regulated by bodies such as the CySEC, FSA, BaFin, and more.
| Pros | Cons |
| A regulated broker | Customer service is not always available |
| Offers access to numerous financial markets | Trading services not available in all countries |
| Various trading resources | |
| Supports multiple payment options |
READ THE FULL EUROPE FX REVIEW HERE
eToro
eToro is a global copy and social trading broker, making it easy to buy Bitcoin in the UK and various other countries. It supports multiple payment options, with its other effective trading features enabling anyone to trade a wide range of financial assets with ease. eToro is regulated by the CySEC and the FCA in the U.K.
| Pros | Cons |
| Low CFD trading fees | Slow fund withdrawal |
| Zero fees for stock and ETF trading | Supports only a single base currency |
| Social and copy trading options |
READ THE FULL ETORO REVIEW HERE
Plus500
Plus500 has gained fame in the brokerage world as it is a fully regulated platform. It is also listed on the London Stock Exchange, which makes it a reputable platform to buy Bitcoin in the UK. In addition to Bitcoin, you can trade other financial assets like indices, Forex, shares, options, commodities, and ETFs.
| Pros | Cons |
| Easy to use trading platform | Limited products available |
| Listed on the London Stock Exchange | Limited research tools |
| Low CFD trading fees |
READ THE FULL PLUS500 REVIEW HERE
Buying Bitcoin from an ATM
The UK is one of the countries with the highest number of Bitcoin ATMs. Over the past few years, Bitcoin ATMs have sprung up to make it easier for people to buy, sell, and withdraw digital assets from their BTC reserves. At the moment, the UK has 278 Bitcoin ATMs found in several parts of the country. London has the highest number of Bitcoin ATMs, with a total of 172, while Birmingham and Manchester come second and third with 23 and 18, respectively. All the ATMs support the buying and selling of Bitcoin instantly. As such, you can handle your Bitcoin reserve from any of the 278 Bitcoin ATMs scattered around the country.
| Pros | Cons |
| Fast and convenient to use | High fees |
| Increases adoption of Bitcoin | Difficulty in locating Bitcoin ATMs |
| It is secure to use | |
| Easy to buy BTC using an ATM |
UK Tax Directive Regarding Bitcoins & Cryptocurrencies
The UK taxes Bitcoin and cryptocurrency transactions, for both individuals and businesses. The guidelines released by the HMRC (HM Revenue and Customs) in 2018 has been guiding the tax directives for people and businesses operating within the cryptocurrency space. At the moment, the HMRC does not recognize crypto assets to be a form of currency and Bitcoin is treated as ‘private money’. This means that when BTC is exchanged for British pounds or other foreign currencies, no VAT will be due on the value of the Bitcoin themselves. It is important to note that VAT will be due from suppliers of any goods or services sold in exchange for Bitcoin or other cryptos. In addition, profits and losses on cryptocurrencies are subject to capital gains tax.
UK Tax on Holding Bitcoin
The UK has different tax policies for people that hold and trade cryptocurrencies. In the country, if you are buying and holding your cryptocurrency investment and then selling according to the market conditions, then it is termed as an investment, and your gains and losses will be taxed. Cryptocurrencies are known as fungible assets. This means that gains you make on BTC can be offset with the losses on BTC and more. The capital gains may be between 10-28%.
UK Tax on Trading Bitcoin
The taxation for trading Bitcoin differs from that of holding and investing in the asset. If you are actively mining Bitcoin or involved in making multiple trades via buying and selling various cryptocurrencies, then your earnings will be taxed as a trading operation. For those that trade Bitcoin, they are expected to prepare trading accounts for tax and also register as a sole trader for the purpose of income tax. Since cryptos are fungible assets, the gains made can be offset with the losses. If the asset is equity-linked, then reliefs should be looked into. Also, where debt-linked, exemptions can be considered. Regardless, the UK position in terms of trading Bitcoin is not clear, and financial advice should be sought accordingly.
What Tax Do I Pay if I lose the Keys?
If you lose or misplace the private keys to your Bitcoin stash, then you will not pay tax on the cryptocurrencies you were holding. Although the private key still exists as part of the cryptography, it is not associated with the owner anymore. Also, while Bitcoin still exists in the distributed ledger, since the keys have been misplaced or lost, there is no capital gains tax to be imposed on these digital coins.
