Knowledge Portal: Managing Business Finances and more

CHRIS BARNARD August 30, 2023

We’ve all heard of cryptocurrency, but how many of us actually understand what it is and how it works? This guide will tell you what you need to know – and help you decide whether it’s the right investment for you.

What is Cryptocurrency?

Cryptocurrency is digital money that is designed to be used over the internet. The first cryptocurrency was Bitcoin, which launched in 2008 and remains by far the biggest, most influential, and best-known.

In the decade since, Bitcoin and other cryptocurrencies like Ethereum have grown as digital alternatives to currency issued by governments. There are now more than 1,500 cryptocurrencies you can invest in or trade.

A glossary of key Crypto terms

Cryptocurrency

A relatively new type of virtual money that is nearly impossible to counterfeit or double-spend. There are no physical coins or notes, it’s a digital asset stored in a hot or cold wallet online. A hot wallet is like your everyday purse, which should hold only a small amount of funds that you use for regular transactions. A cold wallet is like your savings account, which holds the majority of your funds – but transfers cannot happen so quickly. A cold wallet is a better option for people who aren’t regular crypto traders.

Decentralisation

This means there's no central authority, like a bank or government, controlling how things work. Cryptocurrency is circulated through a process of volunteers from across the world using their computers.

Distributed/Public ledger

A database that is shared worldwide and allows the network of volunteers to secure and validate transactions made with cryptocurrency.

Centralised ledger

The opposite to a distributed ledger. This is what most companies use. It’s more vulnerable to cyber security threats, because it exists as a single point.

Blockchain

The blockchain is a public ledger that records all transactions made on the network. It's distributed over thousands of computers around the world to ensure that no one person can control it or make fraudulent transactions. Every computer on the network has its own copy of this ledger, so there's no single point of failure where hackers could target and corrupt all copies at once. It was originally created to run Bitcoin, but is now applied to many other areas of society, including government record-keeping, banking and finance, healthcare and supply chain management.

NFTs

This stands for Non-Fungible Tokens. “Non-fungible” describes something unique that can’t be replaced with something else. NFTs are a digital asset like cryptocurrency but they represent real-world objects like art, music, video game items or videos. They are bought and sold using the same technique and software as cryptos. When you buy an NFT you are buying its ownership, which can’t be copied, though the artist can still keep the copyright and reproduction rights. Put it this way, anyone could buy a Van Gogh print – but only one person owns the original.

How else does crypto differ from regular currency?

The biggest difference is that crypto is decentralised. However, there are several other key differences worth discussing.

If you own crypto, you don’t possess anything tangible. What you own is a key that allows you to access your account to withdraw or move funds from one person to another without a trusted third party.

This “key” takes the form of a string of random letters, which should be treated similarly to a bank account number. Nobody should have access to it except you, or they could wipe out your account. You must keep it safe because you can’t reset it like a password. Most crypto platforms where you purchase your coins will never ask for your key.

You also have a “public key” or address, which is actually your home address or the place where your funds will be sent that you then share with anybody who wants to send you crypto coins. However, people don’t send you funds through the post. You can have a link generated that uses this address where people can transfer you coins online. This public key needs less protection than your private one, but you should still keep a good record of it.

The global financial system has been based on a set of laws and best practices for centuries. Crypto, on the other hand, is a largely unregulated market, and any rules in place often vary by judgement.

Sending money internationally and across borders is much faster with cryptocurrency. Instead of days, transactions are completed in minutes at a fraction of the cost.

Normal money has an unlimited supply, because more can be printed in times of financial crisis. Cryptocurrency, however, is in limited supply. Once a certain number of virtual coins are in circulation. For Bitcoin, this number is 21 million. This limited supply works to crypto’s advantage, because it theoretically ensures that coins hold their value for years to come. A bit like digital gold.

Transactions are permanent and final. It is nearly impossible to reverse any crypto transactions.

Although Bitcoin has been around since 2009, cryptocurrencies and applications of blockchain technology are still emerging in finance and more uses are expected in future. Transactions including bonds, stocks, and other financial assets could eventually be traded using the technology. Some shops have begun accepting crypto as payment.

Pros and Cons of Investing in Crypto

Pros:

You can send coins worldwide
Make instant, secure transactions
No or low fees
Can be easily converted into cash without affecting its market price
Potentially high returns on investments

Cons:

Largely unregulated
Few businesses currently accept crypto
It’s a high-risk investment because its value fluctuates a lot quickly
You can’t recover transfers that have been processed

Taxes and Cryptocurrencies

There are no clear-cut rules, because the government has not classified cryptocurrency as a taxable income. However, when you use it to purchase goods or services, your transaction is considered a taxable event.

Cryptocurrency is treated as both property (like stocks) and currency (like foreign exchanges). This means any earnings from the sale of cryptocurrency are treated as capital gains.

The tax implications of this can be complicated because many people forget to report cryptocurrency exchanges on their tax forms, or to keep accurate records of their earnings from crypto.

Crypto doesn’t have to be cryptic

You may now feel sufficiently confident to enter the world of cryptocurrency. However, if you need advice at any time about any aspect of crypto, you are welcome to get in touch with us.

FAQs on Understanding Cryptocurrency

What is cryptocurrency?

Cryptocurrency is a digital asset that uses blockchain technology to record and verify transactions. Unlike traditional currency, it isn’t issued by a government or central bank, and its value can fluctuate significantly.

How does cryptocurrency work?

Crypto operates on a decentralised network called a blockchain, where transactions are recorded across multiple computers. This structure ensures transparency and security, as no single entity controls the system.

Is cryptocurrency legal in the UK?

Yes, cryptocurrency is legal to buy, sell, and hold in the UK. However, it’s regulated by HMRC for tax purposes and the Financial Conduct Authority (FCA) for anti-money laundering compliance.

How is cryptocurrency taxed?

HMRC treats crypto as an asset rather than money. You may pay Capital Gains Tax when selling or exchanging crypto, or Income Tax if you earn it through mining, staking, or as payment for services.

Is cryptocurrency safe to invest in?

Crypto can be high-risk due to volatility and limited consumer protection. It’s important to research thoroughly, diversify investments, and store your crypto securely using reputable exchanges or hardware wallets.

Can Collective Concepts Accounting help with crypto tax and accounting?

Yes, we can help you understand your tax obligations, keep accurate records, and stay compliant with HMRC’s guidance as you explore cryptocurrency investing or integrate crypto into your business.

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Business rates: The most outdated tax in the UK?

By Chris Barnard • January 21, 2026

Few things frustrate British business owners more than business rates. If you ask someone running a shop, café, studio, or office, what they think about business rates, you’ll get the same answer. And it isn’t one we can publish! Almost all owners see business rates as outdated, unfair, and out of touch with how businesses work today. It raises an awkward question. In a country supposedly trying to encourage entrepreneurship, regeneration and innovation, why are we still relying on a tax that seems to actively discourage all three? A tax stuck in the past Business rates have existed in some form for centuries. They started as property taxes in 17th-century England, when most wealth was in land and buildings. Back then, it made sense: if you had valuable property, you were seen as successful and able to help fund local services. Value is now created through digital services, intellectual property, brands and platforms, and not just physical premises. Yet business rates still operate on the same basic principle. Where you are matters more than how you’re actually performing. There have been some attempts at reform but there has been no interest in conceding that the tax is no longer fit for purpose. Rateable values are still based on estimated rents. Revaluations do not happen often, and reliefs are added on top instead of being part of the system. In short, business rates have been adjusted, not redesigned. How much are UK businesses really paying? Many people are surprised by how much businesses pay in rates, especially compared to other business taxes. UK businesses pay more than £25 billion in business rates each year. This is one of the biggest business taxes, second only to employer National Insurance contributions. According to the Office for Budget Responsibility , business rates consistently raise more revenue than corporation tax from SMEs. The way business rates are calculated in England also stands out. For 2024 to 2025, the standard multiplier is just over 51p per pound, so businesses pay about 51p each year for every £1 of rateable value. This is especially controversial because businesses must pay rates even if they are not making a profit. A company can be losing money and still have a large rates bill. In contrast, corporation tax only applies to profits. The British Retail Consortium often points out that business rates hit physical retailers the hardest. Retailers make up about 5 per cent of the UK economy but pay over 20 per cent of all business rates. For many high street businesses, rates are their biggest fixed cost after wages and often cost more than rent. The physical presence penalty Business rates mainly penalise businesses for being visible and having a physical presence. The more established you are in your community, the more you usually pay. Top high street spots, warehouses near transport links, and city-centre offices all have higher rateable values. At the same time, digital businesses can earn a lot in the UK while working from cheaper locations or even abroad. There are some digital services taxes now, but they bring in much less than business rates and only affect a small number of companies. This means the system encourages businesses to keep their physical presence small and discourages investment in high streets, town centres and community spaces. It’s no wonder that our high streets have become like ghost towns. What do other countries do differently? The UK depends more on property-based business taxes than most other countries. In Germany, local authorities levy a trade tax based largely on profits , not property values. France has made big changes to its business taxes by reducing those based on property and focusing more on economic activity and value creation. Many countries check property values more often that the UK, which helps avoid sudden jumps in costs, and they limit yearly increases more strictly. The priority elsewhere is to focus more on what businesses earn, not just where they are. Is reform even possible? Business rates give local authorities a steady and reliable source of income, which makes them hesitant to change the system. However, just because the system is stable does not mean it is fair for those who pay. The current setup puts too much pressure on some sectors that are already struggling, while letting others grow quickly with lower costs. The main obstacle to reform is political. Any real change would shift who pays more or less tax. Some businesses would pay more, others less. It means big decisions which most politicians shy away from. Ignoring this issue has real effects, which we can see on our high streets. Time for a grown-up debate Business rates no longer match how business works in the UK. They discourage investment in physical locations, make competition unfair, and put too much pressure on traditional businesses. Whether the solution is a tax based on turnover or a mix of models, keeping things as they are is getting harder to justify. This is not a question of lowering taxes. The challenge is to find a system that fits a modern economy. Don’t pay too much Business rates might feel immovable, but there are reliefs, exemptions and reductions available. Many businesses either miss them entirely or do not realise they qualify. Small Business Rate Relief, retail and hospitality relief, transitional relief and discretionary local authority support can all make a real difference if they are properly understood and applied. The problem is that the system is complex, inconsistent and rarely explained in plain English. We can look at how much you are paying in business rates and ensure that you are not missing out on possible reductions.