Cryptoasset tax reporting for UK individuals

In filing that claim, the crypto assets get treated the same way as when they’ve been disposed of, then re-acquired for the amount stated in the claim. That allows you to write off a major loss for an asset that is now illiquid. Like with most things HMRC-related, you can still protect yourself from incurring unnecessary tax liabilities if you pay close attention to the rules around tax on cryptocurrency in the UK. Here our small business accountants give a guide on what you can claim and what you can’t claim.

If you are one of the crypto taxable UK brigade, we hope this article has helped to lighten your darkness. If you have any other questions or concerns, you should download a copy of HMRC’s Cryptoassets Manual or have a chat with a specialist wealth management company. A couple of years ago, HMRC confirmed that they are working with various crypto exchanges, sharing information from their “Know Your Customer” records. They use this information to send out reminder letters to investors to prompt them on their obligations and to track down anyone they suspect of failing to complete the necessary returns.

quick Qs on Bitcoin, crypto and tax

https://www.tokenexus.com/currency transactions considered as income are taxed at the same rate as your ordinary income tax bracket. In some cases, you may also be required to pay National Insurance contributions on your cryptocurrency earnings. It’s simple to calculate your capital gain or loss once you have your cost base. A capital gain or loss is the difference in value between when you purchased the asset and when you sold, swapped, spent, or gifted it. Subtract your cost basis from the fair market value of the asset on the day you disposed of it if you spent, traded, or gifted it. Rather, it regards it as a property – as a capital asset, similar to a property or a share.

However, there is also the question of where crypto is situated and this will affect taxpayers who pay UK tax on a remittance basis. This issue is also far from decided and HMRC’s views can be challenged. The UK currently has a tax-free allowance of £12,570 that is called the “personal income tax allowance”. Therefore, it is essential to be aware of this when you calculate your crypto taxes and tax bands for income. Remember that you will not be eligible for the personal income tax allowance when you earn more than£125,140 per year. Suppose you don’t fall into any of the categories described in the two rules above.

How your capital gains tax is calculated

This value can then be used as an allowable Crypto Taxes in the United Kingdom when they decide to dispose of the crypto assets. While disposing of such cryptocurrency, any gain in value from the time of acquisition will be added to the trading profits. You will also have to pay National Insurance Contribution for this transaction. For hard forks, where you receive a new coin as a result of a fork – you still won’t pay any Income Tax on receipt of these coins.