Crypto Taxes in the United Kingdom

In 2018, the local HMRC published a dedicated manual on crypto-asset taxation. Since then, this has been supplemented several times to accommodate changes and developments in the sector. In general, the authorities in the UK view crypto-assets as property, and so they are subject to many of the same laws.

If you buy and sell a cryptocurrency the same day, then the sale is considered made from the coins you bought on that same day. How much you must actually pay in taxes will be shown after you have completed the Self Assessment. Since the payment deadline is the same as the tax return deadline, we highly recommend doing your crypto taxes before this date to avoid any big surprises right before the taxes must be paid.

Employment income

There’s no guarantee of what will or will not happen if you fail to file your cryptocurrency taxes with HMRC. However, it’s recommended to stay compliant by properly filing all of your capital gains and income. In this guide, we’ll cover everything you need to know about HM Revenue and Customs (HMRC’s) guidance on cryptocurrency taxes.

Crypto Taxes in the United Kingdom

This guide breaks down everything you need to know about cryptocurrency taxes, from the high level tax implications to the actual crypto tax forms you need to fill out. If you are a crypto trader, HMRC will treat you the same as any other cryptocurrency business. This means you may be liable not only to income tax on your gains, but also potentially to Corporation Tax, Stamp Duty, VAT and National Insurance contributions.

How are forks being taxed?

Note that in a transfer transaction, the FMV of the fee cannot be added to the resulting coin’s cost basis. This situs of exchange tokens is only based on HMRC guidance and has not been specifically legislated for. Working out the tax due on your crypto can be complex and that’s where crypto tax software comes in. Crypto tax software integrates with the exchange you use to buy and sell your cryptocurrency. It automatically grabs the details of your transactions and records them for your tax records.

  • Before you invest, you should get advice and decide whether the potential return outweighs the risks.
  • Examples include buying from an exchange and not receiving the currency or Ponzi schemes.
  • When utilizing cryptocurrencies for payment of goods or services, no value-added tax (VAT) is imposed on the cryptocurrency itself.
  • Those found to have evaded the tax could also face criminal charges and jail time.
  • While we are independent, the offers that appear on this site are from companies from which receives compensation.

However, with this sudden jump in popularity, cryptos have also entered authorities’ crosshairs. Many have started introducing bills in the hopes Crypto Taxes in the United Kingdom of taxing and regulating cryptocurrencies and digital assets. One of the first was the United Kingdom, which outlined a clear policy on taxation.

How to legally reduce your crypto taxes?

Basically, if you’ve ever used crypto, Her Majesty’s Revenue & Customs (HMRC) wants to know about it. UK residents are subject to Capital Gains Tax at a rate of up to 20% on disposal of cryptocurrency. Also, employees must pay Income Tax if they are paid in exchange tokens.

  • If you have made multiple purchases at different prices on the same day, the cost basis is calculated by finding the average acquisition cost.
  • UK residents are subject to Capital Gains Tax at a rate of up to 20% on disposal of cryptocurrency.
  • Your capital gains will be taxed under the same rates regardless of your holding period of the crypto.
  • Therefore, you’d pay 20% tax on your Bitcoin earnings, which equals £1,000.
  • This means that if you buy cryptocurrencies and they appreciate in value, that increase will be subject to a tax when you decide to sell.
  • Don’t worry we won’t send you spam or share your email address with anyone.