Crypto Tax UK
HMRC released a statement in 2019 confirming that individuals selling cryptoassets will be subject to capital gains tax (CGT). CGT will be due on profits made, over the tax-free annual allowance threshold. Individuals will need to report gains to HMRC on a self-assessment tax return.
The deadline for registering for self-assessment is 5th October 2022 for the tax year 2021/22.
Cryptoassets and Capital Gains Tax
Capital gains tax applies where there is a disposal of cryptoassets and a gain has been made or when one cryptoasset is exchanged for another.
If you were to exchange Bitcoin for Litecoin, and gains are made, this would be seen as a deemed disposal for tax purposes and CGT would be due.
Losses can also be relieved from other assets that are subject to capital gains tax.
Tax implications can also arise when swapping or gifting cryptoassets (except to a spouse). HMRC views this as disposal of an asset.
In some cases, HMRC has deemed the buying and selling of cryptoassets as trading. Under UK tax, profits made from trading will be subject to income tax and not capital gains tax. However, this is a rare occurrence as the majority of individuals are not seen to be trading.
It is important to note that capital gains tax is only due on all gains above the annual allowance, which is £12,300 for the 2022/23 tax year. This includes gains from all capital assets.
How can we help?
Whether you are an individual or a business, we can ensure you are complying with tax regulations surrounding cryptoassets.
At STS (Europe) we can offer advice to ensure UK crypto tax compliance when trading with cryptoassets. We will also assist with the completion of self-assessment tax returns and ensure all profits are taxed in the correct manner.
If you are trading with cryptoassets and would like to know how we can help ensure you are tax compliant, get in touch with us.
Call us on 01704 891676
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The information in this guide is intended as an informative piece and does not constitute tax advice for individual matters.