Cryptocurrency Tax

As cryptocurrency has become increasingly popular in recent years, the treatment of cryptocurrency tax has also become more important, particularly with HMRC now paying close attention.

If you are involved in any aspect of cryptocurrency trading, then you may want to consider seeking advice from an accountant.

At Kingston Burrowes, our knowledgeable yet down to earth team will explain in simple terms the reporting obligations you will need to make to ensure you remain compliant.

We will not only deal with your HMRC tax reporting requirements, but we can provide tax efficient planning of your crypto assets.

There is no specific crypto tax in the UK, and instead it is subject to either Capital Gains Tax (CGT) or Income Tax.

The tax you will pay is dependent on the specific transactions you make but ultimately if you are seen to be making an income, then you will pay income tax, and if you are seen to be making a capital gain, you’ll pay CGT.

As a relatively new area, cryptocurrency legislation is developing quickly, and it’s important to remain on top of the changing rules to avoid any unwanted penalties or investigations from HMRC.

As with all taxable income or gains, it is vital that you keep a record of the transactions you make when buying, selling, or investing in crypto.

You may have multiple transactions spread across various wallets and it’s important that you track your crypto activity to ensure that your capital gains/losses as well as crypto income and expenses can be correctly calculated on the necessary tax returns.

We recommend that all our crypto clients use a crypto tax app such as Koinly to manage their transaction details.

In addition to the services we offer to ensure your cryptocurrency assets and transactions remain tax compliant, we can explore and advise you on the most efficient tax structure for your cryptoassets.

As with most trading and investment activities, it is more beneficial in the long term to consider the tax treatment of transactions before you complete them.

It’s been reported in recent months, that HMRC have begun sending ‘nudge letters’ to prompt taxpayers who may need to consider their cryptocurrency tax affairs.

These letters do not necessarily indicate that HMRC has specific information relating to incorrect tax returns or unpaid tax. However, they do have access to data on UK crypto holders from the crypto exchanges and they are utilising this to send these prompts.