Check if you need to pay tax when you sell cryptoassets


They’re more akin to transferring your crypto from one place to another because you’re not actually disposing of the asset. Buying crypto with stablecoins is viewed as trading crypto for crypto, so any profits are subject to Capital Gains Tax. For those long-term HODLers, it may be worth using a platform that tracks and stores trading information for long periods of time, as exchanges often only keep information for 3 to 6 months. You’re not taxed when you buy crypto with fiat currency – like GBP – in the UK. Due to this KYC Identity check, your information will be passed along to HMRC, making them aware of any losses or gains you may have made in the past year.

tax and national

Here in the UK, your annual allowance is £12,300, so you only have to pay CGT if your gains are in excess of this sum. You calculate CGT by comparing the price and which you bought the asset to the price at which you dispose of it. Subtract the value at which you bought the asset from the value at disposal, and the difference is the gain upon which you will have to calculate how much CGT you are liable for.

Tax on Crypto Currency UK Income

If you give Crypto Taxes in the United Kingdomcurrency as a gift to someone other than your spouse or civil partner, you will have to figure out the market value of the crypto on the date that it was given away as a gift. This will be considered as sales proceeds for Capital Gains Tax purposes. If your total taxable gain is above the annual tax-free allowance, you must report and pay Capital Gains Tax. To check if you need to pay Capital Gains Tax, you need to work out your gain for each transaction you make.

  • A ‘day-trader’ is probably the most obvious example – someone who actively buys and sells crypto assets to create short-term profit.
  • If you are not a UK tax resident, or do not have a domicile in the UK, then you can benefit from more favourable tax rules.
  • If you have made gains on crypto-assets over £12,300 in any one tax year, you must declare them to HMRC.
  • However, you can use the trading allowance against both trading income and miscellaneous income.
  • If HMRC raises an enquiry into your tax returns, it is likely to question the appearance of profits in your bank account that have not been accounted for.

For more in on cryptoassets generally, you may also be interested in the information published by the Bank of England and the Financial Conduct Authority. Therefore, income from mining, staking and airdrops may not be taxable in the UK if you are non-resident. However, HMRC have not published guidance on this point and we would recommend taking professional advice.

How are individuals taxed

Unlike many other countries, the UK doesn’t have a short-term and long-term Capital Gains Tax rate. The amount of Capital Gains Tax you’ll pay depends on how much you earn. Don’t worry, you won’t have to pay tax on the entire amount when you sell something. You’ll only be taxed on cryptocurrency profits, so anytime you make a profit.

Is crypto taxed in the UK?

Yes – cryptocurrency is taxable in the UK. HMRC is clear that crypto may be subject to both Capital Gains Tax and Income Tax depending on the specific transaction.

If you run your own business, any crypto income should be dealt with as being part of your trading profits. However, even if you meet all the above conditions, you must still keep records of any cryptoasset transactions. In addition, it is a good idea to calculate your gains or losses each tax year in any case, so you have an up-to-date record of the cost of your cryptoasset holdings. This will mean it is easier for you to work out if you owe capital gains tax in a future tax year. The UK’s HMRC has very specific rules for crypto cost basis methods, known as share pooling. This is to stop crypto investors from manipulating the ACB cost basis method by purchasing and selling assets at a loss in a short period of time to create an unrealistic view of gains and losses.

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