Crypto currencies - Quick Overview

Cryptoasset gains are usually treated in the same way as other capital gains. This means that profits above the annual exempt amount are subject to Capital Gains Tax (CGT).

For 2024–25, the annual exempt amount is £3,000. Gains above this are taxed at 20% (for higher and additional rate taxpayers).

🔍 How Gains and Losses Are Calculated

• You are taxed only on realised gains - when you sell crypto and convert back into GBP (or another fiat currency such as EUR or USD).
• Simply holding crypto without converting does not trigger a taxable event.
• Gains and losses are reported in GBP terms on your UK tax return.

✅ Reporting Requirements

You must report your crypto activity to HMRC if your total proceeds from crypto (and/or other capital assets) exceed four times the annual allowance.

• For 2024–25, this threshold is £12,000.
• This applies even if you haven’t made a taxable gain or loss.

Example:

If you sell a property in the same tax year, pushing your total proceeds above £12,000, you may also need to report your crypto activity on your Self Assessment return, even if your crypto gains are below the tax-free allowance.

🔍 See HMRC guidance on reporting Capital Gains Tax

⚠️ Reporting Losses

If you realise a crypto loss, it’s important to report it on your tax return.

• Reported losses can be carried forward to offset against future capital gains.
• This can reduce future tax bills.

🔍 See HMRC guidance on claiming losses

💡 Special Case: Professional Crypto Traders

Most individuals are taxed under CGT rules. However, if HMRC considers you a professional trader (i.e., trading is frequent, organised, and conducted like a business), your profits may instead be taxed as income.

• Income tax rates are higher (up to 45%).
• Whether HMRC treats you as a trader depends on your circumstances. In these cases you will want to seek professional advice.