Guide to cryptocurrency capital gains

Guide to cryptocurrency capital gains | 3 minute read

Also known as crypto-currency or crypto, cryptocurrency is any form of currency that exists digitally or virtually and uses cryptography to makes it nearly impossible to counterfeit or double-spend.

And, people use cryptocurrency for a vast range of different reasons including

quick payments, anonymity, and avoiding transaction fees that regular banks charge. But that’s not all… a lot of people hold cryptocurrency as an investment, with the hope that their investment will increase in value.

And, when it comes to understanding cryptography gains, it’s important to understand how they work and how HMRC views Bitcoin and other cryptocurrencies.


Is crypto taxable in the UK?

Yes. You will have to pay tax on crypto in the UK and it’s important that it is included within yourself assessment. If you do not know how to do this, it’s always worthwhile approaching a qualified accountant to support you during the process as it’s important that all of the information you provide on yourself assessment form is accurate.


How is crypto taxed in the UK?

In the UK, you will find that there are no specific Bitcoin tax or cryptocurrency tax however, your crypto will be subject to Capital Gains Tax or Income Tax and it’s important that you understand how this works.

How much crypto tax you will be expected to pay depends on a number of factors including the transactions which you are making with your crypto. Ultimately, if you’re seen to be making an income through your crypto, you’ll be expected to pay Income Tax and if you’re seen to be making a capital gain, you’ll pay Capital Gains Tax.


Crypto Capital Gains Tax UK

HMRC view all crypto currencies as a capital asset. Therefore, if you reach a stage where you want to dispose of your crypto, you will have to pay Capital Gains Tax. Basically, anytime you sell, trade, spend or gift crypto in the UK, you will be subject to Capital Gains Tax.

You should always familiarise yourself with examples of disposals of crypto which includes:

  • Selling crypto for GBP or another fiat currency
  • Spending crypto on goods and services
  • Trading crypto for crypto
  • Gifting crypto

You will also need to remember that if there is a profit at the point of disposal, the profit can be taxed as a capital gain.


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