It depends why you are asking.
For VAT purposes, transactions in cryptocurrencies are treated as VAT exempt, essentially on the grounds that Bitcoin and similar cryptoassets are a form of currency.
For UK profits tax purposes, however, the position is different. HMRC has published a policy paper today explaining how the UK tax rules apply to individuals buying and selling cryptoassets (including cryptocurrencies such as Bitcoin) as an investment.
The HMRC paper says that Bitcoin and other cryptoassets are not treated as currency for UK direct tax purposes.
Instead, the tax treatment is broadly similar to the way individuals are taxed when they invest in shares in private companies. This means that profits from investing in cryptoassets are subject to capital gains tax. Individuals have an annual exempt amount for capital gains tax (currently £11,700), so a net gain position in a tax year that exceeds that amount will result in a capital gains tax charge.
Interestingly, there is some discussion in the HMRC paper as to whether transactions in cryptoassets represent a gambling activity. There are certainly commentators who think the price volatility of cryptoassets, and the speculative nature of these investments, more closely resembles gambling than conventional investment activity.
The background here is that individuals are not taxed on their gambling winnings (and, more to the point, obtain no tax relief for their losses). Today’s HMRC paper makes clear that HMRC does not think about transactions in cryptoassets in the same way. The conclusion is that a gain or loss made by an individual holding cryptoassets as an investment should – however speculative that investment may be – be taken into account for capital gains tax purposes.