Digital assets can seem confusing because they are a relatively new phenomenon. To help you understand this a little more, we have created a Guide where you can find answers to questions related to the assets you hold in the form of cryptocurrency.
Here are some key takeaways from our guide:
- You must report all of your crypto transactions to HMRC, even if you don't owe any tax.
- You can use a crypto tax calculator to help you calculate your gains and losses.
- You can file your crypto taxes online using the HMRC website.
- There are a number of software tools that can help you track your crypto transactions and calculate your taxes.
Summary of tax on digital assets
- Capital Gains Tax (CGT) is the main tax you will pay on crypto in the UK. You will pay CGT when you sell a crypto asset for a profit. The amount of CGT you pay depends on the size of your profit and your income tax band.
- Income Tax may also apply to crypto if you receive income from it, such as staking rewards or mining rewards. The amount of Income Tax you pay depends on your income tax band and the type of income you receive.
- VAT may apply to crypto if you sell it as part of your business. The rate of VAT you pay depends on the type of crypto asset you sell.
- Other taxes that may apply to crypto in the UK include stamp duty and inheritance tax.
The guide also provides some tips for minimising your crypto tax liability, such as:
- Holding your crypto for longer periods of time, as this will reduce the amount of CGT you pay.
- Selling your crypto in batches, as this will allow you to spread out your CGT liability.
- Using crypto tax-friendly exchanges and wallets.
Due to the nature of Cryptoassets (HMRC’s definition!) our services are bespoke to each client. Some of our experience includes:
- Capital Gains Tax calculations involving the most basic to the most complex scenarios including voluntary disclosures
- Maintaining a running log of their asset pools and therefore helping clients plan for future disposal / tax liabilities
- Advice around the best structures to hold cryptocurrencies (individual vs limited company)
- Accounting and Corporation Tax advice within limited companies
- Income Tax (and losses!) e.g. identification of reportable ‘miscellaneous income’ which falls under Income Tax
- Plus much much more!
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