How to Pay Crypto Tax in the UK

Important Information for Cryptocurrency Investors

New Rules and Regulations

In light of the increasing popularity of cryptoassets, HM Revenue and Customs (HMRC) has issued updated guidelines to help individuals understand how to calculate and report their crypto taxes in the UK. The two main taxes applicable to cryptoassets are Income Tax and Capital Gains Tax.

Understanding Your Tax Liability

To determine your tax liability, you must first classify your cryptoassets. HMRC classifies them as either exchange tokens (used as a medium of exchange) or utility tokens (used to access goods or services). The tax treatment differs based on this classification.

Capital Gains Tax applies when you sell or dispose of your cryptoassets for a profit. The rate of Capital Gains Tax is equivalent to the highest tax band you fall into, as it is considered miscellaneous income.

Reporting and Deadlines

For Income Tax purposes, you must declare your crypto-related income in your Self Assessment tax return. The deadline for submitting your return is 31st January following the end of the tax year.

For Capital Gains Tax, you must report any gains or losses you make when you sell your cryptoassets. You have 60 days from the date of disposal to report and pay any Capital Gains Tax owed.

Seeking Professional Guidance

Navigating the complexities of crypto tax can be challenging. It is advisable to seek professional guidance from an accountant or tax advisor to ensure compliance with HMRC regulations and minimize your tax liability.