Do I pay tax on Local Currency?

In a word, Yes. Although social trading is not taxable, anything that would normally be taxed (such as VAT on items) must be declared and tax paid in pound sterling. You need to collect and pay the tax in pound sterling. The easiest way to do this is assume the full price is in pounds and calculate the tax then deduct the amount of local currency you would be willing to accept.

Note that businesses can offset their tax-deductible expenditure in local currency against pound sterling.