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In the UK we have to pay Capital Gains Tax whenever converting from crypto -> fiat or even crypto-> crypto, assuming the value of the crypto has increased from when you bought it.

I wonder if this problem goes away if you buy something direct with Bitcoin?

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It does not. Bitcoin is a commodity, not a currency, so you have to pay capital gains on any appreciation that you realize.

Active traders of Bitcoin have to track the bases of their lots so that they can pay taxes on each sale.

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